Defamation Bill

Public Bill Committee, 26 June 2012.

Dai Havard (Labour, Merthyr Tydfil and Rhymney)

Before we begin, I understand we have shared objectives this morning to try to complete the business up to and including clause 16, if that is possible, allowing a proper debate on new clauses in the second sitting today.

Clause 6 - Peer-reviewed statement in scientific or academic journal etc

Rob Flello (Labour, Stoke-on-Trent South)

Thank you, Mr Havard, and I will certainly endeavour to ensure that we reach the end of clause 16, although we need to ensure that we debate the Bill properly and as thoroughly as we can.

Although I remain disappointed that the amendments to clause 5 were not accepted, I am glad to say that I have a much more positive view of clause 6, which deals with peer-reviewed statements in a scientific or academic journal. I might not go so far as to describe it as a thing of beauty, but it is certainly one of the more attractive aspects of the Bill. I am delighted that the clause has been included, because scientists and academics across the globe have been extremely concerned about the prospect of being sued for libel in this country. There is no greater example of the chilling effect of our current legislation than what has happened to scientists of late. The case brought against Simon Singh by the British Chiropractic Association is one of the best known examples.

The Bill strikes the right balance between removing the chilling effects on scientists and academics of the current legislation, and showing that the new privilege will not be open to abuse. Subsection (2) makes it clear that the statement in question must relate to a scientific or academic matter, and subsection (6) ensures that if it can be proved that the statement has been published with malice, the defence is lost. Those provisions reduce the potential for abuse, and they are to be welcomed.

In the case of Simon Singh, where comments were made in a newspaper rather than in a journal, will the Minister clarify whether the defence in clause 6 would have been available? Such a situation might have been addressed by the adoption of new clause 6, which would have provided a true public interest defence. I would, therefore, appreciate the Minister’s comments on whether he would be willing to give the matter further consideration, given that academic and scientific journals are not the most popular publications for the average person on the street. In my view, it is still necessary for statements such as those made by Simon Singh to be available in more widely circulated publications.

I am sure that the Minister will be pleased to know that the Libel Reform Campaign supports the clause, believing that it will provide better protection for academic and scholarly publications. With that, in the spirit of trying to move forward, I will sit down.

Paul Farrelly (Labour, Newcastle-under-Lyme)

I have a brief comment. I congratulate the Government on accepting the recommendation of the Joint Committee on the draft Defamation Bill and bringing forward the clause. It is valuable, and the Government are to be praised for introducing it.

Jonathan Djanogly (Conservative, Huntingdon)

It is nice to see that there is clear consensus on support for the clause, which creates a new defence of qualified privilege for peer-reviewed material in scientific or academic journals. A core concern underlying our commitment to reforming the law is to protect scientific and academic debate from the threat of unjustified libel proceedings. Clause 6 is one of a number of measures in the Bill that are intended to encourage open and robust scientific and academic debate. As hon. Members have said, it responds to a recommendation made by the Joint Committee on the draft Bill.

Subsections (1) to (3) provide for the defence to apply where certain key elements that relate to the peer review process are met. Those are that the statement concerned

“relates to a scientific or academic matter”

and that before it was published

“an independent review of the statement’s scientific or academic merit was carried out by the editor of the journal, and one or more persons with expertise”

in the matter concerned.

Subsection (8) clarifies that where a journal has more than one editor, the reference is to the editor or editors who were responsible for the decision to publish the statement concerned. Those requirements stem from discussions we have had with editors of major journals, and they are intended to reflect the core aspects of a responsible peer-review process to ensure that only publications with appropriate procedures are given the protection of the new defence.

Subsection (4) ensures that the protection offered by the defence is available not only to the author of the peer-reviewed statement but to those who have conducted the independent review of its scientific or academic merit. We consider it fair that reviewers participating in the process, who may need to assess the papers submitted by the author and comment on them, and whose assessments are published in the journal, should also be protected.

Subsection (5) extends qualified privilege to fair and accurate copies, extracts and summaries of the peer-reviewed statement. Subsections (6) and (7) contain provisions that apply to qualified privilege in other contexts. They establish that privilege is lost if publication is shown to be made with malice, and that a person who publishes material in a scientific or academic journal is not prevented from relying on other forms of privilege such as that conferred by clause 7(9) on fair and accurate reports of proceedings at a scientific or academic conference.

The hon. Member for Stoke-on-Trent South asked whether the peer review defence would have been available in the Simon Singh case, and the answer is no. Simon Singh might, however, have been able to benefit from the other changes we are making on issues such as serious harm and honest opinion.

Clause 7 - Reports etc protected by privilege

Rob Flello (Labour, Stoke-on-Trent South)

I beg to move amendment 15, in clause 7, page 5, line 22, after ‘proceedings’, insert ‘, or of the contents of a press release circulated or published’.

My amendment would alter subsection (5), which in turn amends schedule 1 to the Defamation Act 1996. That schedule deals with qualified privilege and statements privileged subject to explanation or contradiction. I will not detain the Committee by going through the 1996 Act, because I am sure that Members know it almost off by heart as a result of their preparation for the sitting.

Amendment 15 is a probing amendment to deal with an issue that was raised in the judgment of McCartan Turkington Breen v. Times Newspapers Ltd. I draw the Committee’s attention to a section of the judgment— I suspect this will be less familiar than the Defamation Act 1996—which I will read for the sake of the record:

“The article contained a passage from the press release which was available at the press conference but only obliquely mentioned. Counsel for the solicitors argued that to this extent the article was not a report of the proceedings of a public meeting. Given a purposive construction of “public meeting”, recognising the role of the press informing the public, this argument cannot prevail. In substance, although not read out, the press release was in reality part of the agenda of the meeting. The technical and artificial argument to the contrary must be rejected.”

To provide some context for the Committee, I will quote the start of the judgment:

“On 24 January 1995 The Times published an article relating to the subject of a press conference which had been held the day before. The press conference had been organised by an informal Committee formed to secure the release and vindication of Private Lee Clegg, who had been convicted of serious criminal offences allegedly committed while he had been serving as a private soldier in the Parachute Regiment in Northern Ireland.”

The Clegg committee held that press conference at Lord St Oswald’s home in Yorkshire on 23 January 1995 to drum up support. The judgment continues:

“Representatives of the press were invited to attend. One of those who did attend was Mr. Wilkinson, the northern correspondent of The Times, who was despatched by his newsdesk to cover the conference and in due course wrote (with others) the article complained of.”

The important part is this:

“A press release was made available to all those attending but was not read aloud during the proceedings, although brief reference was made to it orally by one of the speakers…Mr. Wilkinson took the opportunity to put some further questions to Mr. McKay concerning criticisms of the solicitors made in the press release.”

The judgment explains:

“A measure of statutory protection has been granted to newspaper reports of proceedings of public meetings for over a century…This provision was replaced by a more elaborate provision in section 4 of the Law of Libel Amendment Act 1888”.

The Defamation Act 1952 took the matter further, and that led to the situation in which the judgment was made.

Through amendment 15, I want to clarify whether clause 7 restricts the Turkington judgment, possibly to the disadvantage of newspapers reporting on matters of public interest. As I have said, that judgment ruled that statutory qualified privilege covers fair and accurate—including verbatim—reporting of a press release available at a public meeting but not read aloud, and thus arguably not part of the proceedings. I have read extracts from the judgment, which held that in those circumstances the press release was part of the press conference.

Do we need to insert amendment 15 to ensure that clause 7 includes the McCartan Turkington Breen judgment, or does the Minister feel that it stands by itself? He is nodding from a sedentary position—I always find that a strange thing to say—so I hope that in a moment he will explain why clause 7 is sufficient without the benefit of amendment 15. My concern is that the clause is more restrictive than the McCartan Turkington Breen judgment would otherwise allow.

Paul Farrelly (Labour, Newcastle-under-Lyme)

The Defamation Act 1996 contains a valuable list of sources that attract qualified privilege. Clause 7, which is welcome, extends that list. I hope that the clause will also help people such as Dr Peter Wilmshurst, who made bona fide contributions to academic conferences. Sense About Science is to be congratulated on its campaign to protect members of the academic, scientific and medical communities. The clause will not stop people such as me checking whether there are representatives from Carter-Ruck or Schillings at certain professional conferences. One has sometimes to look around the room to see who might sue one, depending on the remarks one makes, but extending the measure to include professional conferences would widen it and might encourage sloppy speaking. We do not want to do that, or to encourage sloppy journalism.

I hope that the extension of qualified privilege will comfort non-governmental organisations and make them less fearful of so-called reputation management companies. I hope they will be less fearful that they have to prove the truth of reports, some of which have emanated from bodies such as the United Nations. I hope that clause 7, together with the defences for responsible journalism, will give mainstream publications the courage to be more robust when they are faced with claims from solicitors who tout their expertise in so-called reputational management around the world. Broadly, therefore, I welcome the clause.

Jonathan Djanogly (Conservative, Huntingdon)

Amendment 15, which I appreciate is a probing amendment, would amend subsection (5) of clause 7, which sets out the terms of the qualified privilege to attach to reports of press conferences. Subsection (5) currently provides for the defence of qualified privilege to apply to:

“A fair and accurate report of proceedings at a press conference held anywhere in the world for the discussion of a matter of public interest.”

There are drafting difficulties with the amendment but as the hon. Member for Stoke-on-Trent South confirmed, the intention is to extend qualified privilege specifically to a report of the contents of a press release circulated or published at a press conference, in addition to the protection given to reports of the proceedings generally.

The Government do not consider that such a provision is necessary or appropriate. Subsection (5) is intended to reflect the law as it stands, the courts having already recognised that fair and accurate reports of a press conference fall within the scope of a “public meeting” under schedule 1 to the Defamation Act 1996, for which qualified privilege is available. The courts have also held that a report based on material that was handed out to people attending the press conference was still a report of the proceedings at the meeting, even though it was not read out during the meeting. In view of that, we consider a separate reference to press releases to be unnecessary. In any event, it would appear preferable for the court to apply the term “proceedings” in an open and flexible way. On that basis, I hope that the hon. Member for Stoke-on-Trent South will agree to withdraw the amendment.

Rob Flello (Labour, Stoke-on-Trent South)

I am grateful to the Minister for putting that point on the record, and I hope that if the courts are subsequently required to consider the clause, they will have heard and accepted what he said. I beg to ask leave to withdraw the amendment.

Clause 8 - Single publication rule

Rob Flello (Labour, Stoke-on-Trent South)

I beg to move amendment 31, in clause 8, page 6, line 44, leave out from ‘applies’ to end of line 3 on page 7 and insert

‘, if—

(a) a statement is published to the public (“the first publication”), and

(b) there is subsequently published (whether or not to the public) that statement or a statement which is substantially the same.’.

Dai Havard (Labour, Merthyr Tydfil and Rhymney)

With this it will be convenient to discuss the following:

Amendment 11, in clause 8, page 7, line 17, at end insert—

‘(c) the comparative quality and credibility of the source of the subsequent publication, compared with the first publication.’.

Amendment 32, in clause 8, page 7, line 17, at end insert—

‘(5A) Publication shall not be deemed to be materially different merely by virtue of—

(a) the publication, as part of a regular series of publications, without charge on the internet of academic or scientific journals which required payment to access when originally published; or

(b) the creation of an archive accessible on the internet.’.

Rob Flello (Labour, Stoke-on-Trent South)

Amendment 31 probes why the protection of the single publication rule is restricted to re-publication by the same person who published the first statement. Surely that cannot be relevant, provided that the manner of publication is not materially different. I hope that the Minister will explain why it has to be the same person, or—hopefully—agree that the Government must go back and reconsider the clause. The Libel Reform Campaign is similarly concerned that it should not be relevant who subsequently publishes the statement, as long as the manner of publication is not materially different.

Amendment 11 is designed to look at whether there has been a material change if the first publication was in a less credible source than the subsequent one. We are concerned that, for example, in the case of a book based on a newspaper article—the article might have been small and discreet, and might not have attracted a great deal of attention; perhaps it was published in a newspaper known for a somewhat weak adherence to the facts—an author might decide to rely on the information in the article, publish a book and find that the situation we are discussing would otherwise apply. The amendment represents an attempt to determine whether the subsequent publication is as credible as, or more credible than, the original one. We are trying to drill down into the credibility of the argument.

Amendment 32 is somewhat different from amendments 31 and 11, which were probing amendments. It is designed to provide clear protection under the single publication rule for two categories of re-publication. First, a number of scientific journals, which were initially available by subscription—probably, therefore, in paper form—are made open access on the internet after a year. Publishers often find that because of the nature of science, the number of reads of a paper copy of an article falls off quite dramatically a few weeks after publication. There is not much point, therefore, in publishers’ restricting access to the articles after a short time; it is much better for them to open up the publication. It also allows scientists in developing countries to access scholarly works quickly and easily. A monthly journal can cost a university library thousands of pounds, which can be prohibitive for a developing country that seeks to keep as up to date as possible with scientific developments. When the initial clamour for their publications tails away, scientists make them open access on the internet.

Secondly, there is public policy pressure for taxpayer-funded research to be made open access—at least after a year—by publication either in open-access journals or in a university or research institute repository. That is something valuable, and Governments should support and promote it. The amendment is also designed to address the creation of archives on the internet, or even on microfilm, which by definition are materially different in form compared with the original publication but which should not lose the protection of the single publication rule. That rule can be ignored by a court in the interest of justice, but there are public policy advantages to making protection under the single publication rule the default position for archives.

I hope that the Minister will address those issues and explain why he feels that the probing amendments are not necessary. Regarding amendment 11, I hope he might agree to go away and reconsider the clause, and return with an improved version. Amendment 32 is a matter of public policy, which I am sure the Government would want to include in the Bill to protect archives, and academic and scientific journals that make scientific research and knowledge available through open access. I look forward to the Minister’s comments.

Paul Farrelly (Labour, Newcastle-under-Lyme)

Broadly, subject to the questions raised by my hon. Friend the Member for Stoke-on-Trent South, I welcome clause 8. It follows the recommendations of the report by the Select Committee on Culture, Media and Sport on press standards, privacy and libel, to which I contributed. The question of archives remains, however. The report contained a specific recommendation concerning archives, and I, too, would welcome the Minister’s comments on that.

The ultimate test of the clause in operation would be the Private Eye archive test. Is it likely to give comfort to the publishers of that sometimes scurrilous but mostly greatly investigative magazine to be able to publish its archive online?

Jonathan Djanogly (Conservative, Huntingdon)

The amendments relate to clause 8, which provides for a single publication rule. Generally speaking, an action for defamation must be brought against a publisher within a year of publication. Under the current law each publication of defamatory material gives rise to a separate cause of action, so subsequent publications reset the clock. That means, in relation to online material, that each hit on a webpage creates a new publication and potentially a separate cause of action. As a result, publishers are potentially liable for any defamatory material they publish that is accessed online, no matter how long after initial publication the material is accessed. Clause 8 therefore provides a single publication rule to protect subsequent publications by the same publisher.

Amendment 31 would apply the single publication rule to the subsequent publication of the same material by any publisher, rather than by the same publisher, by removing the reference to “a person” in the opening line of subsection (1). It would refocus the provision on the statement being published rather than the act of the person publishing, and it reflects a recommendation made by the Joint Committee. As the Government indicated in their response to the Joint Committee, we do not agree with that recommendation, because we do not believe that extending the single publication rule in such a way would provide adequate protection for claimants.

For example, if a claimant were to bring an action in relation to the original publication and that action took more than a year to resolve, he would have to rely on the court to exercise its discretion under the Limitation Act 1980 and permit him to bring a further action against another person who might re-publish the material. Although the claimant may have obtained a court injunction against, say, the local parish magazine to prevent further publication of the defamatory material, a national broadsheet would still be free to re-publish it. A claimant would be barred from bringing a claim unless the court felt it would be equitable to allow the claim to proceed.

Amendment 11 would allow a court, in considering whether a subsequent publication of the same—or substantially the same—material was made in a materially different manner from the original publication, to have specific regard to the quality and credibility of the source of the re-publication compared with that of the first publication. To strike the correct balance between protecting the claimant’s reputation and protecting the publisher’s right to freedom of expression, subsection (5) provides that the single publication rule does not apply if the manner of the subsequent publication of the statement is materially different from that of the first publication. Subsection (5) indicates that in considering whether a publication is made in a materially different manner the court may have regard, among other matters, to the level of prominence that a statement is given and to the extent of the subsequent publication. The amendment would add to those factors the comparative quality and credibility of the source of the subsequent publication in comparison with the original one.

Unless it is considered in conjunction with amendment 31, it is difficult to see when amendment 11 would apply. If a statement is published for a second time by the same publisher, the comparative quality and credibility of the source will almost always be the same, even though the place where the subsequent publication appears may be different. In any event, the list in subsection (5) is non-exhaustive so if such considerations were relevant the court could take them into account. Because we do not consider amendment 31 appropriate, we do not believe that amendment 11 is necessary either.

Clause 8(4) provides that the single publication rule does not apply when the manner of the subsequent publication of the statement is materially different from that of the first publication. Under amendment 32, a subsequent publication shall not be deemed materially different in two specific instances: first, where the statement is part of a scientific or academic journal, originally accessible only on payment of a fee, which becomes accessible free of charge; and, secondly, where the subsequent publication is the result of the creation of an archive that is accessible on the internet.

The Government’s consultation on the draft Bill expressly recognises that subsection (4) might mean that the single publication rule does not apply to an article that is made available on a free-access basis after it was initially published in a subscription-based scientific journal with a small readership. There may, however, be circumstances when making a previously subscription-based journal article freely available could significantly increase the extent of the publication and cause harm to the claimant. In the light of that, we do not believe that it would strike the correct balance to say that a claimant could never bring an action in such a case. We prefer to leave it to the courts, which will need to be satisfied that the publication has been made in a materially different manner, and that the new serious harm test in clause 1 is satisfied, before finding for the claimant.

Likewise, it is possible to see how placing material on an archive that is accessible on the internet, especially when the material was previously available only in an offline publication, could bring it to the attention of a much wider audience and have a damaging effect on the claimant’s reputation. It is difficult to attempt a precise definition of all the possible situations in which material may be re-published. We believe that it would be unduly inflexible to set out in statute specific instances when the test of whether a publication has been made in a materially different manner may, or may not, be satisfied. On balance, therefore, we believe that it is best to leave the application of the materially different manner test to the courts in individual cases.

The Government consider that clause 8 strikes the correct balance between protecting freedom of expression, by preventing publishers from facing open-ended liability, while safeguarding claimants’ right to protect their reputations. On that basis, I hope that the hon. Member for Stoke-on-Trent South will agree to withdraw the amendment.

Rob Flello (Labour, Stoke-on-Trent South)

May I seek some guidance, Mr Havard, on whether we will move to a stand part debate if I withdraw the amendment?

Dai Havard (Labour, Merthyr Tydfil and Rhymney)

If you withdraw the amendment, we will move to a stand part debate. If you want to start picking and choosing among the amendments, I will give you other advice.

Rob Flello (Labour, Stoke-on-Trent South)

In that case, I will leave my comments until the stand part debate, and I beg to ask leave to withdraw the amendment.

Rob Flello (Labour, Stoke-on-Trent South)

It seems more appropriate to make my comments in this context. One thing that struck me in the Minister’s response—I am grateful to him for it—is that we started with a Bill that sought to codify case law and bring together a set of rules in one place, but he now says we should leave things to the courts to decide. When he spoke about clause 8, he said “may” several times, and several times he said that it was best to leave matters to the courts. I am concerned about the apparent contradiction between the two positions.

Clause 8 is a good clause, and it is very welcome. Broadly speaking—85% to 95%—it gives clarity, but we have reservations about online archives and material that becomes open access after being behind a pay wall. I urge the Minister to ensure that he and his officials work further on the clause and tighten up the wording before Report.

Jonathan Djanogly (Conservative, Huntingdon)

I shall respond specifically to that point by saying that when we create new statute we invite new court decisions and the creation of a new body of case law.

Clause 9 - Action against a person not domiciled in the UK or a Member State etc

Paul Farrelly (Labour, Newcastle-under-Lyme)

I beg to move amendment 52, in clause 9, page 7, line 27, leave out ‘against a person who is not domiciled’ and insert

‘by a person or against a person neither of whom are domiciled.’.

Dai Havard (Labour, Merthyr Tydfil and Rhymney)

With this it will be convenient to discuss the following:

Amendment 53, in clause 9, page 7, line 32, at end insert—

‘(1A) This section also applies in an action for defamation where the court is satisfied that the words or matters complained of have been principally published outside the United Kingdom.’.

Amendment 54, in clause 9, page 7, line 37, at end insert

‘taking all relevant factors into consideration and having regard also to the extent of publication elsewhere.’.

Paul Farrelly (Labour, Newcastle-under-Lyme)

If you will allow me, Mr Havard, before I address each of the amendments I will make a short preamble on libel tourism so that I do not have to repeat those remarks and extend the stand part debate.

Dai Havard (Labour, Merthyr Tydfil and Rhymney)

Okay.

Paul Farrelly (Labour, Newcastle-under-Lyme)

I do not really need to go into the phenomenon known as libel tourism; it is succinctly summarised on pages 48 to 56 of the Culture, Media and Sport Committee’s report on press standards, privacy and libel, which was published in February 2010. I would like to make two overarching points, however.

First, many people, including members of the judiciary, have questioned the real extent of the problem. This point goes back to observations on other forms of journalism. The extent of the problem—the chilling effect, and the incentive that the law gives publishers not to publish, or to withdraw material, even where publication is in the public interest—cannot be measured by the number of cases alone.

Secondly, libel tourism is inextricably linked to the question of court practice. One of the most extreme cases of libel tourism, which has been mentioned before in the Committee, is Mardas v.New York Times. In the so-called Magic Alex case—I will not repeat the details—the Master of the court ruled that it was an abuse of jurisdiction for it to be heard in the UK, but the judge in the case overruled his Master. In our report, we are quite critical of that, but I think that we pull our punches with respect to the judge, Mr Justice Eady. We said:

“On balance, we believe there is sufficient evidence to show that the reputation of the UK is being damaged by overly flexible jurisdictional rules and their application by individual High Court judges, as exemplified by Mr Justice Eady in the Mardas and New York Times case.”

The argument that is often put in the High Court is, “If you disagree with my judgment, you can appeal.” However, appeals are expensive and sometimes time consuming, and that goes to the heart of the problem, which is the cost of defamation law. With respect to court practice, I draw the Minister’s attention to rule 6.36 of the civil procedure rules. He will see that it is extremely broad and that it gives no guidance, particularly on the extent of publication in the UK. The discretion is almost limitless, which is one of the reasons why we wanted the Government to follow the recommendation of the Joint Committee on the draft Bill that we consider the proposed changes to the civil procedure rules that would give effect to the intentions behind the Bill.

Just to conclude my preamble, the real issue is not just the number of cases in the past or their chilling effect but the reputational damage that has been done to the UK and our courts by some of the cases. Let me point out, as an example, the Rachel Ehrenfeld case, which led to the so-called Rachel’s law—not a campaign run by the News of the World but a law passed at New York state level followed by attempts at congressional level that would make UK libel decisions unenforceable in US courts. On reputational damage, I draw the Minister’s attention to the submission made by the Association of American Publishers to our Select Committee. It said that many of the publishers, some of the best names in journalism, made the comment that the libel courts here, with their attendant costs, were tantamount to a racket. It said that a small number of judges of first instance, with lawyers, often from the same chambers, were hearing cases that in its opinion, and our opinion, should never have been allowed to be brought. That submission is also referred to and described in our Select Committee report.

The amendments are probing amendments. Amendment 52 is there to capture the essence of libel tourism, which is where a foreign person or a foreign company brings an action in the UK against another foreign person or foreign company. For example, it is intended to capture the case of Rinat Akhmetov, a Ukrainian businessman, who sued a Ukrainian language website, Obozrevatel, here in the UK. It is also intended to capture the case of Iceland’s Kaupthing bank, which was allowed to sue a Danish newspaper, Ekstra Bladet, in the UK—and we all know what happened to Kaupthing along with the rest of the Icelandic banking industry. As the Minister will recognise, the amendment is intended to address the England and Wales issue. There has been some concern that the clause would make it harder for someone in England and Wales to sue in their own courts.

Amendment 53 captures circumstances in which publication occurs outside the United Kingdom. The case of Dr Peter Wilmshurst comes to mind. He was sued here by a US company, which has since gone out of business, over a report on a Canadian medical news wire and website about comments he had made at an academic conference in the United States. I hope that Dr Wilmshurst would be protected by other clauses in the Bill. Similar circumstances could extend to a UK politician criticising a US politician in the US, if a website carried a report and the US politician felt that he had a case to sue in the UK courts, although no substantial publication had occurred here.

With respect to substantial publication, the amendment seeks to include some recommendations by the Joint Committee on the draft Bill, which alluded to the good elements in the drafting of Lord Lester’s private Member’s Bill. The wording of amendment 53 mirrors some of Lord Lester’s drafting. Amendment 54 would have the same effect as amendment 53. Without amendment to the civil procedure rules, the Bill allows discretion to remain in the hands of judges, notwithstanding the explanatory notes. Amendment 54 makes explicit reference to the extent of publication elsewhere and how it needs to be considered.

In conclusion, I wish to draw the Minister’s attention to the importance of introducing amendments to the civil procedure rules before the Bill comes into force, so that we can judge the effect of the Bill before it completes its passage through Parliament, and in the instance of libel tourism, we need to look at the application of civil procedure rule 6.36 in particular.

Denis MacShane (Labour, Rotherham)

I support my hon. Friend. I hope that, in the general spirit of bipartisanship, the Minister is prepared to accept the amendments which substantially strengthen the Bill and would finally bury London’s reputation as a town called “Sue”, where people from outside the UK, with no connection to the UK, can bring a libel action. In this great international city—indeed, this multinational, multicultural country of ours—something can be read on the internet or perhaps a publication sent in by mail, so, technically, deemed to be available in the UK.

On the whole, British law should be for the health and protection of British citizens, not for oligarchs from anywhere in the world. It was not a problem until 20 years ago and the end of the communist world. Very rich people in other parts of the world have been advised that if they come to London, and only London, they can take action against people who irritate them. The Kaupthing bank case is a good example, because it was an attempt to kill the canary in the coal mine.

The Danish paper paid a little more attention perhaps than our Financial Times or The Economist to the appalling goings on in the Icelandic banking system, which were known on the island itself and to those who tracked Iceland. It referred to the fact that the bank was run by people who had no qualifications and who should not have been allowed to be bankers at all. Instead of alerting the world to the impending menace, which has caused devastating trouble, particularly for our many local authorities that invested with the bank, the opposite happened. That is to say that the London courts were used to try to shut down criticism. Is the Minister prepared to look at my hon. Friend’s amendment, so that we delete the phrase,

“against a person who is not domiciled”

in the UK, and replace it with

“by a person or against a person, neither of whom are domiciled”?

That seems quite a reasonable and modest extension to the wording of the Bill.

I strongly urge Members to support amendment 53, so that any action for defamation has to be about words that have been principally published inside the UK. One cannot just go on a huge trawl round the world. There are a lot of ugly websites and magazines. I do a lot of work in the Caucasian/Black Sea area, where journalistic ethics are pretty poor. People insult first, defame second and then think about checking their facts. These papers are not even owned by Rupert Murdoch or Lord Rothermere. None the less, I do not think that those quarrels, serious as they may be, should be transferrable to the English court system.

To read the editorial in The New York Times about how any American notion of press freedom was absolutely mocked by what happened in English courts, in the Ehrenfeld case in particular, was for me, both as a journalist and parliamentarian, deeply shaming. I do not know whether the Minister has to say that he is not going to accept this today, just pro rata. However, I invite him and his officials seriously to consider my hon. Friend’s amendments on Report.

Simon Hughes (Liberal Democrat, Bermondsey and Old Southwark)

I want to make a general point and a couple of quick specific ones in relation to the first two of the three amendments. In relation to asylum applications, for some years, the system has required an asylum seeker to apply in the first country they arrive in after they have left the country from which they seek asylum. There is an international arrangement that effectively determines what that is. The Home Office and its officials are allowed to say that it is not appropriate for an application to be brought here. For example, someone might have first arrived in France and therefore should be remitted to the French authorities.

I welcome the Government’s inclusion of this important clause. We need to deal with the abuse that has been long identified; bluntly, we were being used by people who did not really have an interest in coming here to use our courts. I am interested to hear from the Minister how this can be made to work in practice as efficiently as possible, effectively using the civil procedure rules to allow an initial inquiry to be made of the court, so that the court can quickly knock out a case with which it is inappropriate to deal here. That is what we ought to aim at. Does the Minister think there is civil co-ordination under the treaties referred to—the Lugano treaty and others—that could allow a quick reference? That might happen when the facts are given to a judge or a master here or someone at a preliminary hearing, who can say it obviously looks like a case that should be taken to the courts in Switzerland, Portugal or wherever, and therefore rules that that is the most appropriate jurisdiction.

Amendment 52 seems attractive, because it appears to govern both the claimant and the defendant, and requires a domicile link for either or both, rather than, as the Bill is currently drafted, only in relation to an action for defamation against a person who is not domiciled. I am interested to hear what the Minister has to say about what seems a sensible tightening of both ends of the action. The second amendment seems to suggest a reasonable test for the judge to apply at the initial hearing before the substantive one. With respect to the hon. Member for Newcastle-under-Lyme who tabled the amendments, the Minister might say that the third one is covered more clearly by the drafting. However, I will leave it to the Minister to respond to that.

Lastly, sweeping that up into a general conclusion, so far, the Minister has been helpful in Committee and has said that he is listening and is willing to continue the process of getting the legislation right—a process started with the draft Bill and the work of the Joint Committee—which is positive and constructive. The hon. Member for Stoke-on-Trent South has also been co-operative, as have my right hon. Friend the Member for Carshalton and Wallington and I. If we can tighten up the measure and improve it, we ought to do so. If there are technical problems with the amendments, everyone understands that, so I am not suggesting that my right hon. Friend and I leap in and stand behind the hon. Member for Newcastle-under-Lyme, saying, “This must be voted through now.” I hope, however, that the Minister can be sympathetic to the first two of the three amendments in the group and that he can talk to us a bit now or under clause stand part about the process for ensuring that as little time as possible is spent in our courts by a case that should be dealt with somewhere else.

Ben Gummer (Conservative, Ipswich)

I shall speak against the amendments. I have great respect for the hon. Member for Newcastle-under-Lyme and his deep knowledge and interest in this area, but I fundamentally disagree with the position that he and the right hon. Member for Rotherham are taking.

I do not understand why it is necessarily wrong that contracting parties or non-contracting parties who are not domiciled in the United Kingdom cannot use our courts for libel purposes. The issues raised by the hon. Gentleman and the right hon. Gentleman are problems with the decision of the court, as they see it, but not necessarily with the parties concerned. It is all right to bring up the example of Kaupthing, which might be reasonable in retrospect, but that was a problem with the decision of the court and not with what he sees as libel tourism. Had Kaupthing been a British bank and the newspaper British, the decision would no doubt have been the same and still erroneous in that instance, just as many court decisions in libel cases have been erroneous in retrospect and subsequently caused criminal prosecutions, because of perjuries committed during the prosecution of the libel cases.

Denis MacShane (Labour, Rotherham)

With respect to the hon. Gentleman, had it been a British bank and a British paper, the British paper would have been much better armed and much more ready to create public concern. Every British MP could have been alerted to the fact that a British bank was doing the monstrous things that Kaupthing has done. I do not see why British courts should come to the aid of a crooked Icelandic bank suing a Danish paper.

Ben Gummer (Conservative, Ipswich)

The right hon. Gentleman is the foremost proponent of the European Union in this House, so I find it an odd argument that the Danish press is any less good at defending its corner than our own, or any less good or less scrupulous at making its own case—in fact, in many instances, it is probably more scrupulous than many of our own newspapers.

It is my contention that, were those parties British and fighting the case in British courts, we would end up with the same decision. It would be no less different or erroneous than it was, so the argument of the Opposition Members is with the process, which is addressed elsewhere in the Bill.

Paul Farrelly (Labour, Newcastle-under-Lyme)

My problem is with both the courts and the plaintiffs, as well as with the lawyers who encourage forum shopping for the most favourable jurisdiction where the libel laws are most restrictive. That is the problem with lawyers, courts and plaintiffs. It is also a problem with costs, because so often such actions have led to non-publication or to settlements, as in the Kaupthing case, because of the sheer cost of defending them.

Ben Gummer (Conservative, Ipswich)

The hon. Gentleman is entirely right. I was not taking issue with his position but with that of the right hon. Member for Rotherham. The right hon. Gentleman was drawing from the example of one case a reason to change the law, and I thought that that was an erroneous association to make.

May I put a hypothetical situation to the hon. Member for Newcastle-under-Lyme for which his amendments would fail to provide a remedy? Let us say that, in the happy event that the murderous Assad regime is toppled, there is at some point in the next few years a general election in the absence of a fully developed jurisdiction for libel. Let us say that Press TV libels and defames one of the principal candidates during the election campaign; an interview or accusation is made which is covered partially in the United Kingdom, but is seen by many more people across the globe. The candidate’s only recourse for challenging that defamation—the most elegant and efficient way with backing from a supporting party—would be in the United Kingdom courts. If the amendments of the hon. Member for Newcastle-under-Lyme were accepted, that would be impossible.

Denis MacShane (Labour, Rotherham)

It is impossible under the law.

Ben Gummer (Conservative, Ipswich)

I shall come on to that.

Looking at the unhappy examples that the hon. Member for Newcastle-under-Lyme has given, I completely understand why he would want to see reform both in law and in jurisdiction. However that could have unintended consequences and it is important that the Government respond, for this fundamental reason: the English courts are used around the world in commercial contracts. This is the largest centre for clearing commercial contracts in the world; in a similar vein, people who want to set up a commercial trust go to Delaware, which specialises in creating corporate trusts that work in the United States.

I think that that is a good thing for British courts. It creates an enormous amount of work for the City of London and helps oversight of our own corporate governance because it is such a big part of our jurisdiction. The Government are very much concerned with corporate law, not only for our own purposes, but for international reasons.

Andrew Slaughter (Labour, Hammersmith)

The hon. Gentleman is making a good case, particularly as the Minister and the Lord Chancellor often promote British courts, even having suites of courts fitted out and air-conditioned for commercial disputes, attracting clients from around the world. However is there not a distinction between the quality of justice and the courts system here, and the deficiencies in libel law? It is the latter that has attracted libel tourism.

Ben Gummer (Conservative, Ipswich)

I agree—this is a happy moment—very much with the hon. Member for Hammersmith. I see no problem at all with offering London as a centre for international litigation on defamation, for parties who have got absolutely nothing to do with the United Kingdom, and in doing so I take issue with the Government’s position. I will not die in a ditch on it, but I do not see why we are closing off a position where we can offer a business centre to the rest of the world, especially as the global media have created more and more opportunities for newspapers to be read around the globe. The Daily Mail is the third most read newspaper website outside the United States. That will only continue, so it seems rather odd to create this insularity around our national media jurisdictions.

Simon Hughes (Liberal Democrat, Bermondsey and Old Southwark)

I am listening carefully to my hon. Friend. I understand his argument, but may I clarify something? He seems to be making two different arguments. First, if it is impossible for a case to be brought, such as in the Syrian example that he posited, it ought to be possible for somebody to come somewhere where they have a chance of bringing a case that they could not bring anywhere else. Secondly, we are a good place for these sorts of cases because of the business they bring. I am very sympathetic to the first proposal and wonder whether my hon. Friend thinks it is possible to amend the drafting of the measure—it would not be miles away from where it is—to accommodate it. The second proposition is quite a different one, which the Government have not so far adopted. Am I right in that analysis: he is arguing for two sorts of cases that ought to come here? Some of us may go with him part of the way, even if we do not go with him all the way.

Ben Gummer (Conservative, Ipswich)

Yes, that is a correct distinction, but there are many instances which should be excluded by the amendments. I have no particular problem with rather unattractive parties fighting defamation cases in the United Kingdom if the law itself can be improved to the point where they know that they will receive a fair hearing, that costs will not be extortionate and that, if they take on someone of little means, they are protected. Those are my key caveats.

Paul Farrelly (Labour, Newcastle-under-Lyme)

First, I assure the hon. Gentleman that the example he gives of Press TV would be unaffected by the amendments. Press TV is a UK-based organisation that used to hold a licence here, but I do not know what the current situation is. Secondly—and this is a fundamental point—the hon. Gentleman seeks to make London the tourist destination of choice for litigants. I and his right hon. Friend the Member for Bermondsey and Old Southwark probably disagree with making it a duty for the British tourism association to encourage such activity.

Ben Gummer (Conservative, Ipswich)

The hon. Gentleman may be entirely correct, but in the hypothetical world we could take “Russia Today”, or whatever Putin’s mouthpiece is called.

Denis MacShane (Labour, Rotherham)

I have been on that.

Ben Gummer (Conservative, Ipswich)

The right hon. Gentleman has a show, I believe.

The point still stands. We could end up with a situation in which we do not offer the excellent service that our courts can provide in such an instance. I have no problem with libel tourism if it drums up business for British courts, so long as people are protected in those courts, and there I have a slight difference with the Government. Perhaps the Minister will explain how, as the media become more and more global and international, drawing defined boundaries around us and the European Union will help to reform and modernise defamation law.

Dai Havard (Labour, Merthyr Tydfil and Rhymney)

I am looking at the clock and as general comments have been aired, I am minded to call the Minister to respond to the amendment, and then to ask for a formal stand part vote when we come to it.

Rob Flello (Labour, Stoke-on-Trent South)

I want to say a few words on stand part, not the amendment, if I may.

Dai Havard (Labour, Merthyr Tydfil and Rhymney)

We can combine the two. I call Ms Goodman first.

Helen Goodman (Labour, Bishop Auckland)

I have one question for the Minister, which would be part of a stand part debate. I understand that the issue is basically libel tourism, but the Minister did not address dog-legging when the claimant and author are both in the UK, but the website operator is in the overseas jurisdiction. I believe that this might be the place to sort out the problem. I would be grateful to hear whether the Minister had time over the weekend to think about that, and whether he will share his thoughts with us.

Rob Flello (Labour, Stoke-on-Trent South)

Clause 9, much like clause 6, is welcome. The intention is to deal with high-profile problems of libel tourism. It is widely held that current laws in England and Wales mean that claimants may bring a case here instead of abroad, and perhaps be more successful. I welcome the clause, but I have some concern about it. As it stands, it makes it clear that a court may hear a case only if it is

“satisfied that, of all the places in which the statement complained of has been published, England and Wales is clearly the most appropriate place in which to bring an action in respect of the statement.”

I hope that the wording is clear enough to remove any ambiguity, and I hope that a reasonable judge would read it and consider it sensible to hear cases only when it is clear that publication was mainly in England and Wales. However, there are problems. It seems to cover only defendants who are resident outside the European Union, and the Lugano convention comes into play.

I will curtail what I was hoping to say, mainly because of the extensive but perhaps equally curtailed debate a few moments ago on the amendment. It is important to raise what others have said about the clause. The main point that struck me was that despite the talk of tackling libel tourism, the clause, if unamended, would not deal directly with libel tourism—that is, foreign plaintiffs coming to this country to sue because it is a better place for the case to be heard. It covers only libel kidnap when a plaintiff, foreign or not, seeks to serve an action out of jurisdiction on a non-EEA-domiciled person. So the clause would cover the case of Rachel Ehrenfeld, the US author who, if she were to be sued anywhere by the Saudi plaintiff, should have been sued in the US.

Although the clause is effective on libel kidnap, it cannot address libel tourism because it cannot directly restrict jurisdiction in cases where the defendant is domiciled in the EEA by virtue of the Brussels regulation and the Lugano convention, as set out in subsection (5). Libel tourism is best addressed through the statutory strike-out procedure, as I have proposed in new clause 8. I will not incur your wrath, Mr Havard, by straying into that new clause, but I hope we have the opportunity to discuss it this afternoon, should the time allow.

Dai Havard (Labour, Merthyr Tydfil and Rhymney)

Mr Farrelly? [ Interruption. ] Sorry, I forgot about the Minister.

Jonathan Djanogly (Conservative, Huntingdon)

I have a little bit to say, Mr Havard.

The hon. Member for Newcastle-under-Lyme set out the potential for reputational damage and the cooling effect on free speech seen through the impact of libel tourism. He helpfully highlighted examples presented to the Joint Committee. These are probing amendments, but they raise a number of relevant issues, which I will address.

Amendments 52 and 53 address the types of case caught by clause 9’s provisions on libel tourism. Under the clause, for the court to have jurisdiction to hear an action against a defendant who is domiciled outside the UK, EU or a state that is a signatory to the Lugano convention, the court must first be satisfied that, of all the places in which the statement complained of has been published, England and Wales is clearly the most appropriate place in which to bring the action.

Amendment 52 would apply the new hurdle in clause 9 only in cases where both the claimant and the defendant are domiciled outside the UK, EU or a Lugano convention state. That would narrow the effect of the clause’s provisions on libel tourism because cases in which the claimant is domiciled in the UK, EU or a Lugano convention state would no longer be covered.

The Government currently do not consider that narrowing the clause’s scope is appropriate. Such narrowing would mean, for example, that a Russian oligarch domiciled in England or Wales might sue a person domiciled outside the UK in the English courts in circumstances where the alleged main harm to his reputation had occurred elsewhere. We consider it right that such cases should be caught by the test.

Where a claimant in a case in which the defendant is domiciled outside the UK, EU or Lugano convention state is unable to satisfy the court that, of all the places in which the statement complained of has been published, England and Wales is clearly the most appropriate place to bring an action, he or she should be refused access to our courts and should be required to seek redress abroad.

Such cases are not likely to arise with any frequency, but when they do they give rise to legitimate concerns about libel tourism, which uses up the court’s time and resources. We do not believe that the requirement to show that England and Wales is clearly the most appropriate place to bring the claim will cause undue inconvenience to claimants domiciled here who legitimately wish to bring an action in this jurisdiction to protect their reputation.

In most cases where a claimant is domiciled in England and Wales, the clause 9 test is likely to be satisfied, as the main harm to their reputation will have been caused here. In such circumstances, the claimant will readily be able to show that this is the most appropriate place to bring the claim. In cases where the test cannot be satisfied, however, it is right that claimants domiciled here should not be able to use our courts to pursue libel actions that are more appropriately heard elsewhere.

Amendment 53 would extend the circumstances in which the provisions of clause 9 applied to a defamation action where the court was satisfied that the words or matters complained of had been principally published outside the UK. That would mean that, in all cases where the court considered that the principal publication had occurred outside the UK, the court would have to be satisfied that this is clearly the most appropriate place for the claim to proceed.

The amendment would be a substantial extension of the clause’s scope and would mean that, in every case where a defamation action was brought, the court would have to consider whether the allegedly defamatory material had also been published outside the UK and, if so, whether the principal publication had taken place here or elsewhere. How the court would decide whether the principal publication test had been satisfied is also unclear. If such a decision hinged on the extent of publication here, as opposed to elsewhere, that would omit a range of factors that may also be relevant, such as the extent of the claimant’s connection to the UK or his or her reputation here. That would add significantly to the evidence that the claimant would need to provide, and hence to the cost of the proceedings.

In addition, the amendment would mean that if the court decided that the words complained of had been published principally in France, for example, then unless the court was satisfied that England and Wales was none the less clearly the most appropriate place to bring the claim, the claimant could be prevented from doing so, notwithstanding the fact that the defendant was domiciled in this jurisdiction. That would conflict directly with the core principle in article 2 of the Brussels I regulation, under which the court generally has no discretion to refuse jurisdiction in cases where the defendant is domiciled in England and Wales. We must ensure that our law is compliant with European legislation, so we cannot accept the amendment.

Amendment 54 would require the court, in considering under clause 9(2) whether England and Wales is clearly the most appropriate place in which to bring an action, to take all relevant factors into consideration and to have regard to the extent of publication elsewhere. The Government do not believe that the amendment is necessary because in considering whether the clause 9 test is satisfied, the courts will naturally take all the relevant circumstances into account. In addition, we do not believe that it would be appropriate to single out a specific factor such as the extent of publication.

Extent of publication will, of course, be an important factor. However, the range of circumstances that the court may wish to consider are diverse, and the balance between them will depend on all the circumstances of the case. For example, in addition to the extent of publication, the court may also need to consider factors such as the extent of each party’s connection to England and Wales, the extent of the claimant’s reputation here and whether the claimant would receive a fair trial elsewhere. We do not consider it appropriate to give greater weight to a particular factor by including it in the Bill.

We also consider that, due to the diverse range of circumstances that may be relevant, it would be preferable to set out such factors in secondary legislation, where a more flexible approach can be taken. I have given an indication of some of the factors that would be relevant, and I can confirm to the hon. Member for Newcastle-under-Lyme that we will ask the Civil Procedure Rule Committee to consider a suitable list in due course, including the one identified by him. I say to my right hon. Friend the Member for Bermondsey and Old Southwark that we will consider how the rules can best support the new clause generally and will ensure that procedural guidelines are made available when it comes into effect.

I can tell my hon. Friend the Member for Ipswich that I have been active in encouraging companies to use English jurisdictional clauses, and we have the new commercial court. We want Britain to be a place where people do business—that includes signing their contracts and then disputing them—but that is different from being seen as the libel capital of the world based on defamation arbitrage and invalid concerns for our reputation as defenders of free speech. Very few cases go to court in any event. It is the cooling effect that is of most concern.

Simon Hughes (Liberal Democrat, Bermondsey and Old Southwark)

Will the Minister address the other point made by our hon. Friend the Member for Ipswich about cases such as the Syria example? I hope that we would be able to accommodate a claim in such cases, where there is no possibility of any such action being taken in the other country.

Jonathan Djanogly (Conservative, Huntingdon)

My hon. Friend asked why a case that can be brought elsewhere, such as in Syria, should not be heard here. There are a range of factors that the court will want to take into account in deciding whether the clause 9 test is met and whether the claimant would receive a fair trial elsewhere. That is one issue that the courts might want to consider.

The hon. Member for Bishop Auckland asked what the position is when an author in the UK brings a claim against a non-UK website operator. An action could still be brought against that website operator if the court were satisfied that the UK was the most appropriate place to bring a claim. On that basis, I ask that the amendments be withdrawn.

Paul Farrelly (Labour, Newcastle-under-Lyme)

With respect to the comments about using UK courts to settle disputes, I take that as not entirely tongue in cheek, but I understand that the Minister is a corporate finance lawyer by background standing up for his profession. The intention of the amendments, imperfect as they are, was to probe the Government’s intention behind the clause, which relates to the broad parameters of civil procedure rules. The issue takes us back to the operation of the courts and I want those rules to be tightened. I welcome the Minister’s intention to produce a list and I hope that we will see it before the Bill is enacted.

I am sure that the issue will come up again on Third Reading and in the other place, given the Joint Committee’s recommendations on the draft Bill and the wording in Lord Lester’s private Member’s Bill. At present, however, I beg to ask leave to withdraw the amendment.

Clause 10 - Action against a person who was not the author, editor etc

Paul Farrelly (Labour, Newcastle-under-Lyme)

I beg to move amendment 51, in clause 10, page 8, line 20, after ‘for’, insert ‘damages for’.

This amendment, along with amendments 49, 16 and 50, is complementary to those that we tabled to clause 5. As I recall, the Minister listened with some sympathy to our arguments in favour of those earlier amendments.

Simon Hughes (Liberal Democrat, Bermondsey and Old Southwark)

On a point of order, Mr Havard. I am probably thinking what you are thinking—namely, that although the hon. Gentleman is trying to help the Committee, we have to take the amendments separately.

Dai Havard (Labour, Merthyr Tydfil and Rhymney)

Thank you, Mr Hughes. Thank you for being helpful, Mr Farrelly, but for the sake of process we will have to take the amendments one at a time.

Paul Farrelly (Labour, Newcastle-under-Lyme)

Amendment 51 would confine the clause to actions for damages only. Without that, a person covered by the clause could carry on publishing defamatory material, even if the author, editor or publisher was successfully sued. When we debated clause 5, I gave the example of a malign constituent posting defamatory material about an MP on a political forum maintained by an opposing party. Without the amendment, the operator of a forum who gave up the identity of the author and did or did not sue him or her could keep the defamatory material online and the MP, or any other claimant, would have no remedy. The amendment would, again, bring the take-down procedures within the jurisdiction of the courts.

Jonathan Djanogly (Conservative, Huntingdon)

Amendment 51 would provide that a court does not have jurisdiction to hear and determine an action for damages for defamation brought against a person who was not the author, editor or publisher of the statement complained of, unless it is satisfied that it is not reasonably practicable for an action to be brought against the author, editor or publisher.

It appears that the amendment is intended to allow the court to hear an action against a person who is not the author, editor or publisher of the statement complained of, but to remove damages as a potential remedy in such actions. That could lead to a situation where even when it is reasonably practicable for an action to be brought against the author, editor or primary publisher, the secondary publisher would end up having to defend a claim—incurring costs in the process—although they would not be liable for damages if the claimant were successful.

I believe that the amendment is intended to work alongside the amendments tabled by the hon. Member for Newcastle-under-Lyme to clause 5—I think he said that earlier—addressing situations where a secondary publisher does not remove defamatory material despite a successful claim having been brought against an author, editor or secondary publisher who cannot himself remove the statement. As I have already said, we will be giving further consideration to that issue and on that basis, I hope that the hon. Gentleman will agree to withdraw his amendment.

Paul Farrelly (Labour, Newcastle-under-Lyme)

This is all to do with the interaction between clauses 5 and 10. On the basis of the Minister’s remarks, I beg to ask leave to withdraw the amendment.

Paul Farrelly (Labour, Newcastle-under-Lyme)

I beg to move amendment 49, in clause 10, page 8, line 21, after ‘person’, insert ‘(other than an operator of a website (as defined in Clause 5).’.

Again, the provision is to do with the interaction between clauses 5 and 10. As it stands, the clause is confined to persons other than the operators of websites, which means that clauses 5 and 10 cover different things; otherwise clause 10 would provide a complete defence to website operators in relation to any case where the author, etc., was reasonably identifiable, and the sensible clause 5 notice procedures would be redundant. Therefore I urge the Minister again to consider the interaction of the two clauses. He has remarked previously on clause 5 about the sense of allowing website operators to rely on the duality in both clauses.

Jonathan Djanogly (Conservative, Huntingdon)

Amendment 49 would prevent website operators from benefiting from the protection that clause 10 provides to those who are not primary publishers of allegedly defamatory material. Clause 10 as drafted extends to any person who was not the author, editor or publisher of the statement complained of and provides that person with protection from potential liability unless the court is satisfied that it is not reasonably practicable for an action to be brought against the author, editor or publisher. This has a much wider application than the defence under clause 5, which is restricted to website operators, and reflects the Joint Committee’s concern that there should be greater protection for secondary publishers generally, such as booksellers.

The intention behind the amendment may be to ensure that website operators engage with the process set out under clause 5 by preventing them from relying on clause 10. We do not believe that extending clause 10 to secondary publishers generally, including website operators, will do that. It is true that website operators are not obliged to follow the clause 5 process. Not doing so simply means that they will lose the defence that clause 5 would afford them. However, if a website operator were to fail to follow the clause 5 process and then attempted to rely on clause 1, on the basis that they are not the author, editor or commercial publisher of the third party material, it would be for the court to decide whether the fact that they had failed to follow the process set out in clause 5 meant that it was not reasonably practicable for the claimant to pursue the primary publisher.

For example, where the author of the third party material is posting anonymously, the website operator’s failure to follow the process designed to assist the claimant in identifying the author would make it significantly more difficult for the claimant to pursue the author. If a court judged that it no longer made pursuing the author “reasonably practicable,” it could allow the claimant to bring an action against the website operator in respect of the third-party material.

Alternatively, the amendment may be intended to work in conjunction with the other amendments tabled by the hon. Member for Newcastle-under-Lyme, which is the case that he made. In so far as that is the case, we will consider whether anything further is needed to deal with such situations, as I have already indicated. We believe that clause 10 represents a fair and balanced approach and I hope that the hon. Gentleman will agree to withdraw his amendment on that basis.

Paul Farrelly (Labour, Newcastle-under-Lyme)

Again, it is all about interaction. I invite the Minister, as the Bill proceeds, to consider whether a choice of either/or, with the duality of clauses, creates some uncertainty, and potentially increased costs in the whole process. However, given the Minister’s remarks, I beg to ask leave to withdraw the amendment.

Rob Flello (Labour, Stoke-on-Trent South)

I beg to move amendment 16, in clause 10, page 8, line 22, leave out from ‘court’ to end of line 24 and insert—

‘(a) is satisfied that it is not reasonably practicable for an action to be brought against the author, editor or publisher; and

(b) has made a determination that the statement complained of is defamatory.’.

The amendment would make a relatively small change, but by seizing an opportunity to prevent unnecessary cases from coming before a court it represents a common-sense approach. In addition to deciding whether it is

“practicable for an action to be brought against the author, editor or publisher”,

a court would make an early ruling on whether the statement concerned was defamatory. That would allow a case that was clearly frivolous or had no hope of success to be thrown out, so that the associated costs would be avoided.

I hope the Minister agrees that that is common sense, and that it would provide a major benefit at the cost of very little extra court time. Although the Minister has yet to adopt any of our amendments, I hope that today he might be in an accepting mood, and that he will rise to accept amendment 16. The amendment would provide an early win by allowing the court, after determining that the case satisfies the existing condition in clause 10, to strike out and say, “There may not be any reasonable practicality, but the matter is not defamatory so let us just get rid of this case and deal with it quickly.” I hope that the Minister will be in a positive mood and will accept the amendment.

Jonathan Djanogly (Conservative, Huntingdon)

I am always in a positive mood. Clause 10 limits the circumstances in which an action for defamation can be brought against someone who is not the primary publisher of an allegedly defamatory statement, by providing:

“A court does not have jurisdiction to hear and determine an action for defamation brought against a person who was not the author, editor or publisher of the statement complained of unless the court is satisfied that it is not reasonably practicable for an action to be brought against the author, editor or publisher.”

Amendment 16 would require that in determining whether it has jurisdiction, the court should also determine whether the statement complained of is defamatory. In practice, that would require the court to consider whether the serious harm test in clause 1 had been met.

Clause 10 focuses on the determination of whether the court has jurisdiction to hear a case against a secondary publisher at all. The amendment would create a rather perverse situation, because the court would have to determine the substance of the case at the same time as it decided whether a case could be brought at all. The Government do not consider that that would be appropriate. It would involve additional evidence and expense, which would be wasted if it was held to be reasonably practicable for the claimant to pursue the primary publisher.

We believe that it is preferable to keep jurisdictional matters distinct from matters that should rightly be considered once proceedings have commenced, and that the question of whether there is serious harm should properly be addressed at an early stage in any substantive proceedings that occur. On that basis, I hope that the hon. Gentleman will withdraw the amendment.

Rob Flello (Labour, Stoke-on-Trent South)

I knew that I would continue to be disappointed with the passage of the Bill through Committee. I hear what the Minister says, and I am disappointed, but I will keep my powder dry and perhaps recast my amendment in a different form on Report. I beg to ask leave to withdraw the amendment.

Paul Farrelly (Labour, Newcastle-under-Lyme)

I beg to move amendment 50, in clause 10, page 8, line 26, at end add—

‘(3) Nothing in this section shall prevent a court from granting any injunction or order requiring a person to cease publishing a defamatory statement.’.

The amendment is entirely complementary to amendment 51 so its fate in Committee is predictable, but I would welcome the Minister’s comments first.

Jonathan Djanogly (Conservative, Huntingdon)

As I have explained, the purpose of clause 10 is to encourage claimants to pursue the author, editor or primary publisher of defamatory material where possible, to reduce the likelihood of secondary publishers being threatened by libel proceedings. Amendment 50 provides that nothing in clause 10 prevents the court from granting any injunction or order requiring a person to cease publishing a defamatory statement. It would prevent actions for defamation being brought against secondary publishers where it is reasonably practicable for an action to be brought against the author, editor or primary publisher, but it leaves the possibility open that an injunction or order might be made in respect of secondary publishers via some other route.

Like amendment 51, it seems that the amendment is intended to complement those tabled by the hon. Gentleman on clause 5. As I have indicated, we will give further consideration to that situation, so I hope that the hon. Gentleman will withdraw the amendment.

Paul Farrelly (Labour, Newcastle-under-Lyme)

Unpredictably, in light of the Minister’s comments, I beg to ask leave to withdraw the amendment.

Simon Hughes (Liberal Democrat, Bermondsey and Old Southwark)

I shall be brief. All Members of the Committee, including the Minister, will have received a submission from the Booksellers Association. The association is very positive and grateful about the clause’s inclusion in the Bill, but it has three questions. I am keen for the Minister to answer those questions on record; the third seems particularly relevant.

First, the association asks when what it calls a “clogging letter” has authority:

“Will the Courts require the Clause 10 issue to be adjudicated before a claimant (or his/her lawyers) can rely upon a so-called ‘clogging letter’ demanding that the bookseller remove the book from sale?”

That point is obviously a concern for bookshops that are indirectly passing on the document. They are worried that they will not have had the chance to read, proof read and go through the content in the same way as the editor or publisher, and they therefore might be caught. A lot of the shops are independent booksellers that would find themselves in great financial difficulty if they were on the end of a defamation case in the courts.

Secondly, the association asks about section 1 of the Defamation Act 1996 and its interrelationship with the clause. Finally, and most importantly, help is asked over the definition of “reasonably practicable”, which is the key phrase in clause 10. As drafted, the clause states:

“A court does not have jurisdiction to hear and determine an action for defamation brought against a person who was not the author, editor or publisher of the statement complained of unless the court is satisfied that it is not reasonably practicable for an action to be brought against the author, editor or publisher.”

The association wonders how that will be clarified; perhaps the Minister anticipates that there will be a definition in secondary legislation. I am aware that the phrase is used often in law, so there is plenty of case law on reasonable practicability in other areas of law. I can see the association’s point, however, and I hope that the Minister will help by alleviating those concerns.

We want good bookshops that are brave and stock controversial books. We do not want them to be timid. They should be places that people go to for interesting, planned purchases, as well as for things that they may not have intended to look for, but discover while they are there. We have great bookshops in Bermondsey now, although we did not when I was first elected. It is of great benefit to the community that we have locally owned, locally run bookshops, and not just national corporate chains. They are good community centres that have discussion evenings, coffee facilities, nice cakes, and all sorts of things.

I hold my surgery in Woolfson and Tay, a bookshop in Bermondsey square. It is a good place and a good community centre that regularly accommodates my surgery. It has not lobbied me about this matter, to be clear, but we need to look after bookshops’ interests. I hope that the Minister will be helpful.

Dai Havard (Labour, Merthyr Tydfil and Rhymney)

Other reading outlets are available, including public libraries.

Rob Flello (Labour, Stoke-on-Trent South)

I wonder which section of the bookshop the right hon. Gentleman holds his surgery in.

Simon Hughes (Liberal Democrat, Bermondsey and Old Southwark)

The community section.

Denis MacShane (Labour, Rotherham)

Myths and fables.

Rob Flello (Labour, Stoke-on-Trent South)

I fear that we will stray into defamation under slander before too long, so I will move swiftly on.

Simon Hughes (Liberal Democrat, Bermondsey and Old Southwark)

We are immune.

Rob Flello (Labour, Stoke-on-Trent South)

Indeed.

Clause 10 is short, but vital because of the protection it provides to, for example, bookshops that stock a book that a claimant considers to contain defamatory statements about them. The clause ensures that a claimant can only take action against someone who is not the author, editor or publisher of a statement if a court considers that it is “not reasonably practicable” for them to take action against one of those parties.

The right hon. Member for Bermondsey and Old Southwark mentioned the recent submission from the Booksellers Association, which I shall return to in a moment. The association also provided written evidence to the Joint Committee, which explains the current problem well: even when no action is taken against the publisher or author, the threat of legal action against a bookseller can be enough to ensure that a book is not available for purchase.

The Booksellers Association believes that the common law defence of innocent dissemination was “inadvertently weakened” by the poor drafting of the Defamation Act 1996. The problem, as the association sees it, is that it is still possible for a claimant to threaten action against a bookseller, who would see little benefit in risking a potentially extremely expensive lawsuit to defend a statement they had no responsibility for and no specialist knowledge of. The clause should, therefore, ensure that that situation does not occur, though, as ever, the true test will come once the legislation is in place and being used.

In his opening comment about the submission from the Booksellers Association, the right hon. Member for Bermondsey and Old Southwark spoke about how booksellers were pleased with the clause, and it is worth drawing the Committee’s attention to the start of that submission, which states

“we are absolutely delighted that the earlier Joint Committee and the Ministry of Justice have listened to our previous representations.”

But, importantly, it goes on:

“However, in spite of secondary publishers like booksellers now being in an improved position, we are still concerned that the proposals don’t give us the appropriate protection that we really need.”

I hope, therefore, that when the Minister rises to answer the questions in that submission—I will not repeat them because we have heard them from the right hon. Gentleman—he will comment on the Booksellers Association’s concern, that, I repeat,

“the proposals don’t give us the appropriate protection that we really need.”

I hope that the Minister will also comment on the clause, and provide a little more information on the definition of “reasonably practicable” so that we can be absolutely assured that the clause, unlike the 1996 Act, will tackle the problem it is intended to address.

Jonathan Djanogly (Conservative, Huntingdon)

Clause 10 seeks to address the concerns that have been expressed about the impact of the current law on secondary publishers more generally, including booksellers and newsagents. The Government consulted on the matter, alongside the draft Bill, following representations from booksellers and others that the defence provided to secondary publishers under section 1 of the Defamation Act 1996 was narrower than the common law innocent dissemination defence that had previously existed.

The respondents on that point in the consultation, and the Joint Committee, argued that the Government should include a provision in the Bill to offer booksellers and other secondary publishers greater protection. In light of that, and in accordance with our aim of ensuring that secondary publishers are not unfairly targeted and that action is taken against the primary publisher wherever possible, Clause 10 removes the possibility of an action for defamation being brought against a secondary publisher, except where it is not reasonably practicable for the claimant to bring the action against the author, editor or commercial publisher of the material.

My right hon. Friend the Member for Bermondsey and Old Southwark asked about the circumstances in which it would not be reasonably practicable for the claimant to take action against the author, editor or publisher. We do not believe that it is appropriate to prescribe in secondary legislation circumstances in which it would not be reasonably practicable for the claimant to pursue the primary publisher, as that will be for the court to determine in each individual case. He also asked how the clause 10 procedure would work in relation to clogging letters. If the claimant chose to bring a claim against a secondary publisher, it would be open to that publisher to oppose it on the basis that the court did not have jurisdiction. The court would then consider that as a preliminary issue in the proceedings, with the parties able to bring evidence as to whether it was reasonably practicable for the claimant to bring an action against the primary publisher.

My right hon. Friend also asked about the interaction between clause 10 and section 1 of the 1996 Act. The defence under section 1 will continue to be available alongside clause 10, so that in the event of an action against a secondary publisher being allowed, the section 1 defence will be available where appropriate.

The hon. Member for Stoke-on-Trent South asked more generally about booksellers’ concerns and asked why we do not restore the innocent dissemination defence that existed before the introduction of section 1 of the 1996 Act. There are differing views about whether section 1 was more restrictive than the common law defence that was previously available. We decided that it would not be appropriate to provide a complete bar against any action against a secondary publisher, for example by introducing a requirement for knowledge that the statement is libellous for the defence to fail, as that could provide an incentive for website operators not to comply with the clause 5 procedure, in the knowledge that they would be likely to succeed in the other defence.

I hope that I have answered hon. Members’ questions. On that basis, I ask that clause 10 stand part of the Bill.

Dai Havard (Labour, Merthyr Tydfil and Rhymney)

We now come to a series of clauses: 11 to 15. We can deal with them one at a time, but my proposition is that I group them together. I will read out the numbers and if any Member wants to comment on a particular clause, they can do so. I will put a single question at the end, putting all the clauses together to put them in the Bill. I start with clause 11.

Clause 11 - Trial to be without a jury unless the court orders otherwise

Simon Hughes (Liberal Democrat, Bermondsey and Old Southwark)

I have just one question. This is obviously the clause that says that, in the future, the presumption in favour of jury trial will be changed to a presumption against jury trial in libel cases. I do not have a fundamental problem with that, but I raised the question with the Minister when we were debating the public interest test and I am somewhat concerned that in terms of the effectiveness and authority of a court decision in a libel case in which the key issue is public interest, that may be better determined if it is done by a jury. Of course the clause does not remove jury trial. It allows the judge to decide that there should be a jury trial. However, I am keen to know how the Minister thinks that will work. I am not against the clause, but I need to be persuaded that we have sufficient flexibility to ensure that the 12 representatives of the public can be there, determining what the public interest is.

Let me give two examples. The first—I am going back a long way—is in relation to literature that was not the subject of a defamation case; there were public order issues. I am referring to “Lady Chatterley’s Lover”. Obviously, that was adjudicated on by the courts, but it involved the public intervening as to what was appropriate. I remember more recently the case that Mary Whitehouse took against the publishers of a magazine in relation to a poem that was regarded as defamatory. Again, I think that the authority of the decision was the greater because it was taken by the public—by a cross-section of people, with different views, different faiths, different outlooks and so on. Deciding what the public interest is may, if it is a very important public issue, be better done by a jury, rather than by a single judge, however good and experienced that judge is.

I would be grateful if we could explore where the Minister thinks the balance will fall. I would like him to say on the record if he can that it certainly is not the wish of the Government that this should mean the end of jury trial for all defamation cases and to say that judges should be absolutely free to continue to decide that there ought to be a jury trial where that is appropriate.

Dai Havard (Labour, Merthyr Tydfil and Rhymney)

For clarity, I point out that because Members want to speak on this clause, we will deal with clause 11, and I shall move back to my list after that.

Paul Farrelly (Labour, Newcastle-under-Lyme)

I welcome the clause. I believe that some of the calls for jury trials to be maintained in what is a civil arena are misplaced. The overall right to trial by jury is utterly inimical to having early hearings on meaning that give clarity and reduce the cost of defamation cases and to having early hearings on whether a publication is fact or comment. Like the right hon. Member for Bermondsey and Old Southwark, I would like to hear from the Minister exactly how he envisages that the jury trial discretion would be used.

Rob Flello (Labour, Stoke-on-Trent South)

I should like to give an early indication that I would like to speak briefly on clauses 12 to 14 and 16.

Clause 11 is another fairly simple clause, which will remove the presumption in favour of a jury trial in defamation cases. As the explanatory notes to the Bill explain, the Senior Courts Act 1981 and the County Courts Act 1984 provide a right to trial with a jury in cases of libel and slander, unless the specifics of the case lead a court to consider that to be inappropriate. Clause 11 will simply remove the words “libel” and “slander” from the relevant sections of both Acts.

The main benefit from the clause appears to be in the cost of defamation cases. The Publishers Association, in its submission to the Ministry of Justice consultation on the draft Bill, suggested that defending a libel case that reached the courts cost on average £1.33 million—a staggering figure. While the vast majority of cases already take place before a judge alone, with six cases in total between 2008 and 2010 taking place with a jury, the fact that the presumption is in favour of a jury means that unnecessary costs are still incurred in the preparation of a case, as all eventualities are prepared for.

That said, Liberty noted in its submission that the clause will make clear that

“actions in defamation will not be heard by a jury in any case unless the court orders otherwise.”

It drew attention to the fact that

“Lord Lester’s Private Member’s Bill similarly reversed the presumption of jury trial in defamation proceedings. Significantly …Lord Lester qualified the reversal by stating that the court may order a trial by jury on application by any party if satisfied ‘it is in the interests of justice to do so’.”

That is quite markedly different from what we have in clause 11. Liberty continued:

“In so deciding the judge would be required to have regard to all the circumstances of the case, including, but not limited to, the public interest in the action, the identity of any parties to the action, the extent to which early resolution is likely to facilitate settlement of the action, etc.”

Liberty is quite clear that it does not support the approach either in the Bill or in Lord Lester’s proposals, but it felt that the latter was more palatable. It believed that

“juries serve a particularly important function in defamation proceedings and that the current strong presumption in favour of trial by jury should remain…Liberty understands the desire to reduce costs in jury trials and action reform that addresses the impact of real inequality of arms. We believe, however, that the presumptive right to a jury trial is an unnecessary casualty in the overall context of this reform.”

While I do not entirely share Liberty’s view of the matter, it is worth pointing out its view that having regard to overall justice is an important issue, rather than how it is narrowly confined in clause 11. I have not felt sufficiently strongly about the matter to table an amendment, but I hope the Minister will respond to the question of whether a wider reading in terms of when justice is served by having a jury trial will apply, not least for the situations described by the right hon. Member for Bermondsey and Old Southwark.

Jonathan Djanogly (Conservative, Huntingdon)

Clause 11 will remove the presumption in favour of jury trial in defamation cases, which currently exists under section 69 of the Senior Courts Act 1981 and section 66 of the County Courts Act 1984. In practice, few defamation cases actually involve juries, and a substantial majority are heard by judges alone. However, the retention of the right to jury trial creates practical difficulties and adds significantly to the length and cost of proceedings. That is because of the role that juries, if used, have to play, such as in deciding the meaning of allegedly defamatory material. It means that issues that could otherwise have been decided by a judge at an early stage cannot be resolved until trial, whether or not a jury is ultimately used. That means that proceedings take longer and cost more than they should.

More than three quarters of responses to our public consultation supported the proposed change, which also received support from the Joint Committee on the draft Bill. In light of that, subsections (1) and (2) respectively amend the 1981 and 1984 Acts to remove libel and slander from the list of civil proceedings where a right to jury trial exists. The court will retain the general discretion that it has to order jury trial where it considers that it is appropriate to do so. The result will be that defamation cases will be tried without a jury unless a court orders otherwise.

My right hon. Friend the Member for Bermondsey and Old Southwark asked in what circumstances would jury trial be appropriate. I can tell him that the courts are familiar with exercising their discretion in relation to jury trial. We considered that it would be preferable to allow them to continue to do so without specifying particular circumstances in the Bill. The issue of the public interest will of course be something that the courts will wish to consider.

I will speak more generally, because hon. Members have voiced general concerns. My right hon. Friend the Member for Bermondsey and Old Southwark and the hon. Members for Newcastle-under-Lyme and for Stoke-on-Trent South have all asked this question. Let me put it on the record that the Government are firmly committed to maintaining the right of a defendant to a trial by jury in criminal proceedings. However, although the position relating to juries in civil defamation proceedings can be clearly distinguished from this, I can confirm that it is not the wish of the Government to end jury trials in defamation trials where the court feels that it is appropriate.

Rob Flello (Labour, Stoke-on-Trent South)

I was listening carefully to what the Minister said and I was waiting for a little more clarity on the point about the courts currently having a wide scope. He touched on it in his first few comments about the court having discretion, but I have a slight fear that the measure narrows that discretion. Will he put on the record that the clause does not narrow in any way the right of the court to, in the wider sense of justice, take the case before a jury?

Jonathan Djanogly (Conservative, Huntingdon)

Yes, that would be for the court to decide.

Rob Flello (Labour, Stoke-on-Trent South)

I thank the Minister.

Dai Havard (Labour, Merthyr Tydfil and Rhymney)

Given what was said earlier, I am obviously not going to be able to group these, so we will have to deal with them one at a time.

Clause 12 - Power of court to order a summary of its judgment to be published

Rob Flello (Labour, Stoke-on-Trent South)

Clause 12 makes a relatively minor change to current legislation, but one that is welcomed as it provides a further means of non-financial recompense for a successful claimant in a defamation case. The clause provides the possibility for a court to order the unsuccessful defendant to publish a summary of the judgment. The wording of the summary and the time, manner, form and place of its publication is to be agreed by the parties, but if the wording cannot be agreed, the court can settle the matter. If there is disagreement over the time, manner, form or place of publication, the court can take into account what is considered reasonable and practicable before making a judgment.

I do not think that there is anything with which to disagree in the clause. I hope that such means for recompense for a defendant will be much valued. It is worth speaking on the clause, because I think that what will be of interest is the interaction between this and whatever comes out of Leveson. I am hopeful that, with the wide-ranging hearing that Lord Leveson seems to be having, these words from this Committee today will fall upon him, and someone will point out to him, if they have not already, this particular clause. It will be interesting to see where that goes.

Paul Farrelly (Labour, Newcastle-under-Lyme)

I want to make three points about the clause. First, in connection with the point made by my hon. Friend, one of the unintended consequences of the clause may be to encourage a defamation action, because a litigant may be safe in the knowledge that—as drafted—where there seems to be a sure-fire outcome, they can get the court to order the publication of a judgment and order its provenance. That is one overarching concern. I am sure that the Minister would not intend that to be the outcome of the clause.

Secondly, if the parties cannot agree, or, in the case of a wealthy litigant, will not agree, does the Minister intend that a judge be in a position in which they can order where a judgment—effectively an apology—goes, and the size and content of it?

The third point, again in relation to the points made by my hon. Friend, is that nothing in the clause makes the court have any regard to any adjudication or decision by a press regulatory body. It is difficult for the Government to include a clause on having regard to an adjudication or decision by the successor to the Press Complaints Commission, but I hope that outwith the Bill the Government might come up with words that will make courts take into account any successor body coming out of the Leveson inquiry or any future proceedings of the House.

Jonathan Djanogly (Conservative, Huntingdon)

The clause extends the circumstances in which the court may order publication of a summary of its judgment, currently available under the summary disposal procedure. Alongside the adjustments in the law included elsewhere in the Bill aimed at supporting freedom of expression, we recognise the need to ensure that effective remedies are available to provide redress to people whose reputations have been seriously harmed. We also recognise, however, the concerns around editorial independence and the need to strike the correct balance in the law. Therefore, the provisions in clause 12 of the Bill, while giving the court the power to order publication of a summary of its judgment in defamation proceedings, will encourage the parties to reach agreement where possible on the contents of the summary and issues such as where, when and how it is published. The provisions enable the court to settle the wording of the summary and give directions on those other matters only in cases in which agreement cannot be reached.

I note the point made with respect to the Leveson inquiry and I agree that the clause should be brought to its attention. As regards the idea suggested by the hon. Member for Newcastle-under-Lyme that the clause might encourage defamation actions, we do not believe that that will be the case. We consider that there is a need to improve the remedies available to claimants in this way, to ensure that the right balance is struck. As to whether we should go further and enable courts to order publication of apologies and so forth, that was opposed by the Joint Committee and most of those who responded to our consultation; such a measure would not be appropriate. We share the Joint Committee’s view that there is no value in forcing a person to make an apology that might be neither meaningful nor sincere.

Paul Farrelly (Labour, Newcastle-under-Lyme)

One effect of the clause—perhaps intended—might, equally, be to bolster effective regulation in the future, whereby a successor to the Press Complaints Commission knows that parties may go to court if editors do not act responsibly with respect to content and families.

Jonathan Djanogly (Conservative, Huntingdon)

That is a possibility, but let us hope that they all start acting responsibly—or continue to do so.

Dai Havard (Labour, Merthyr Tydfil and Rhymney)

I think you had it right, Minister.

Clause 13 - Special damage

Helen Goodman (Labour, Bishop Auckland)

I do not want to make a long speech. I am sure that clause 13 is intended to be what is called a modernising clause, which is fine, but I wondered whether the Minister had had any discussions with any of the Asian communities in which attitudes to women are a good deal more conservative than in most of the community, and whether there had been any consideration of the impact of the measure in such communities.

Rob Flello (Labour, Stoke-on-Trent South)

I have a similar point. I wondered why the provision had not been repealed before. Was it because of concern about the interaction with some of our communities up and down the UK, or has it merely never been brought to anyone’s attention? I do not think for a moment that the changes will lead to a flurry of allegations about adultery, infectious diseases or any such thing, so there is not a great deal to disagree with.

Jonathan Djanogly (Conservative, Huntingdon)

Clause 13 repeals the Slander of Women Act 1891 and overturns the common law rule relating to special damage. Generally, in proceedings for slander, as distinct from libel proceedings, a claimant must prove that the statement complained about has caused him or her special damage. The 1891 Act created an exception in relation to slanderous statements about the chastity of women where the damage is presumed. A similar common law category applies where the imputation is that a person is suffering from a contagious or infectious disease, such as a venereal disease, leprosy or the plague. The Government believe that these provisions are outdated and are no longer relevant or appropriate to modern society. An overwhelming majority of those who responded to consultation on this point were in favour of repealing the 1891 Act and overturning the common law provision.

I have no knowledge of any recorded proposed impact on particular communities. If I hear otherwise, I will write to the hon. Lady on that point.

Helen Goodman (Labour, Bishop Auckland)

Exactly. If the Minister received representations that were not in favour, it would be interesting to hear from whom those representations came.

Jonathan Djanogly (Conservative, Huntingdon)

I will do that.

Clause 14 - Meaning of “publish” and “statement”

Rob Flello (Labour, Stoke-on-Trent South)

Briefly, I want to pick up on the visual images point. The clause says:

“ ‘Statement’ means words, pictures, visual images, gestures or any other method of signifying meaning.”

Last week, I said that it would take five years to review one second’s-worth of videos uploaded to the internet by 2015, which is a horrifying thought. I am keen that the Minister is absolutely certain that this definition of statement will cover not only the existing situation but any foreseen 3D holographic image or whatever that may be waiting for us in the mind of some very creative internet person.

Jonathan Djanogly (Conservative, Huntingdon)

Clause 14 sets out definitions of certain terms for the purposes of the Bill. It provides for the words “publish” and “publication” to have the meaning they have

“for the purposes of the law of defamation generally”.

Simply put, that means communication to a third party. It provides for the word “statement” to mean

“words, pictures, visual images, gestures or any other method of signifying meaning.”

In this case, these definitions mirror those in the 1996 Act and ensure that the provisions in the Bill cover a wide range of publications in any medium, which reflects the current law. I think that I have answered the hon. Gentleman’s point and, on that basis, I ask that clause 14 stand part of the Bill.

Clause 16 - Short title, commencement and extent

Jonathan Djanogly (Conservative, Huntingdon)

I beg to move amendment 1, in clause 16, page 10, line 3, leave out subsections (2) and (3).

Dai Havard (Labour, Merthyr Tydfil and Rhymney)

With this it will be convenient to discuss the following:

Government amendments 2 and 3.

Jonathan Djanogly (Conservative, Huntingdon)

I think that it is quite rare to have got so far during the course of a Bill Committee before the Government start tabling amendments. It is a good sign.

Amendments 1, 2 and 3 extend certain provisions in the Bill to Scotland. The civil law on defamation is generally a devolved area, and the Bill reforms the law in relation to England and Wales only. However, we have been requested by the Scottish Government to extend certain specific provisions to Scotland, and these amendments are intended to fulfil that request. The Scottish Government have confirmed that a legislative consent motion will be put before the Scottish Parliament on a timely basis following these amendments being moved in order to secure their consent.

Amendment 3 amends the provisions on extent in clause 16 of the Bill to provide for the provisions on peer-reviewed material in scientific and academic journals in clause 6 of the Bill, and the provisions in clause 7(9) extending qualified privilege to fair and accurate reports of scientific and academic conferences, to extend to Scotland, together with clause 14, clause 15(5) and clause 16 for consequential reasons. I understand that the request stems from the desire of the Scottish Government to make available in Scotland the protections that the provisions offer against the harmful effect of current libel law on scientific and academic debate. Amendment 3 also provides that the commencement of the relevant provisions in Scotland will be by order of Scottish Ministers. The other two amendments deal with consequential and drafting points. The Government believe that it is appropriate to accede to the Scottish Government’s request.

Rob Flello (Labour, Stoke-on-Trent South)

Amendment 3 will insert a new subsection (6), which states:

“Subject to subsections (7) and (8), the provisions of this Act come into force on such day as the Secretary of State may by order made by statutory instrument appoint.”

Oh, the legalese of such clauses.

I might incur your ire, Mr Havard—I put you on notice, so that you will be listening carefully when I do—but I want to come back to my concerns about the entirety of the Bill in relation to the fact that the regulations provided for in clause 5 have not been tabled. The Government will get their way on these three Government amendments but, given that amendment 3 mentions an order made by statutory instrument, this is an opportunity to flag up to the Minister that the Committee has not considered those regulations. We have another sitting later, and by some miracle they may find their way to us by 4 pm, but somehow I doubt it.

We will not oppose amendments 1 to 3, because it is important that the Bill extends to Scotland and that Scottish Ministers have their say about the territorial implications and about when the Bill comes into force.

Simon Hughes (Liberal Democrat, Bermondsey and Old Southwark)

It is clearly a good idea to extend the Bill to Scotland. One anomaly of recent years has been that people can take legal action in England and Wales but not in Scotland, or vice versa, including people who have come to this country to take such legal action. I absolutely do not wish to trespass on the right of the Scots to have their own legal system, but it is better to have common legislation on such issues, if that is also the will—as it is—of the Scottish authorities. The amendments are clearly welcome and are a move in the right direction.

Jonathan Djanogly (Conservative, Huntingdon)

I thank the Committee for supporting the amendments. I point out to the hon. Member for Stoke-on-Trent South that the secondary legislation he referred to would emanate from the Scottish Parliament, so the question is more for Scotland than for this House.

New Clause 4 - Action for defamation brought by body corporate

Rob Flello (Labour, Stoke-on-Trent South)

I beg to move, That the clause be read a Second time.

Dai Havard (Labour, Merthyr Tydfil and Rhymney)

With this it will be convenient to discuss new clause 7—Corporations—

‘(1) A non-natural person will only have an action in defamation if they can show—

(a) that the publication was published with malice; or

(b) that they have suffered actual or likely financial harm.’.

Rob Flello (Labour, Stoke-on-Trent South)

I am pleased that we have moved on to the new clauses. New clause 4 is about bringing a claim for defamation by a body corporate. Subsection (1) relates to getting the permission of the court. Under subsection (2), in determining whether to grant permission, the court needs to have regard to a number of issues, which are inclusive, not exclusive. Under subsection (4), it is clear that a fall in share price alone will not be sufficient to justify bringing a claim.

New clause 4 is designed to pick up on the Joint Committee’s requirement that although corporations should still be able to sue, there should be a higher test, and the court should need to give permission before action can commence. A number of commentators, including the Libel Reform Campaign, have publically expressed the view that non-natural persons should not be able to sue for defamation at all, pointing out that other remedies are available for companies, in particular, but also that non-natural persons do not have feelings to be hurt.

I was attentive to the debate when we considered amendments 4 and 5 on defamation of the newly deceased, tabled by my hon. Friend the Member for Bishop Auckland. The argument is that they should not be able to sue because they do not have feelings to be hurt. I was struck by the passion with which certain Government Members expressed their feelings that it was a very well established principle that the deceased, without feelings to be hurt, should not be able to take defamation action.

Ben Gummer (Conservative, Ipswich)

Will the hon. Gentleman give way?

Rob Flello (Labour, Stoke-on-Trent South)

I knew that I would provoke the hon. Gentleman.

Ben Gummer (Conservative, Ipswich)

The hon. Gentleman mistakes the purpose of defamation law. Defamation is to protect reputation, which is of value to someone or something, whether alive or existing as a corporate body. It is not to protect the feelings of a body or a person.

Rob Flello (Labour, Stoke-on-Trent South)

I am not sure that I entirely agree.

Anna Soubry (Conservative, Broxtowe)

That is the law.

Rob Flello (Labour, Stoke-on-Trent South)

The hon. Lady has made her feelings clear throughout the proceedings without rising to her feet once to comment.

Dai Havard (Labour, Merthyr Tydfil and Rhymney)

Communicating by other means.

Rob Flello (Labour, Stoke-on-Trent South)

Indeed. We dealt with understatement earlier in Committee. As a non-lawyer, I accept that I am reliant on reading material, but the reading that I have had to undertake over recent weeks and months certainly draws me to the view that there is a reference to feelings. I have read that a number of times. I accept that defamation deals with reputation, but there is the impact of reputation on feelings. I will not tempt the hon. Member for Ipswich to his feet—

Helen Goodman (Labour, Bishop Auckland)

Will my hon. Friend give way?

Rob Flello (Labour, Stoke-on-Trent South)

But I have tempted my hon. Friend.

Helen Goodman (Labour, Bishop Auckland)

My hon. Friend makes an interesting point with the parallel he draws. I listened closely to what the hon. Member for Ipswich said, but I could not see why he took the position he did, given that I do not think there is any move on the Government side to stop giving posthumous awards for gallantry. Clearly, a posthumous award for gallantry is given to somebody who cannot feel anything. It is what other people feel that is significant.

Rob Flello (Labour, Stoke-on-Trent South)

I am grateful. I thought for a moment that the hon. Member for Broxtowe, with her customary ability to interject, wanted to intervene. The point that my hon. Friend the Member for Bishop Auckland is making, if I have understood it correctly, is that we recognise the reputation of somebody who is deceased by giving them an award posthumously. To relate that to corporations, the reputation of a company is obviously important—I shall come to that—but damage to reputation, and the feelings hurt by the non-natural person, are another matter entirely.

Andrew Slaughter (Labour, Hammersmith)

I am not really following the discussion—well, I am not following it, full stop. We already have clear law in respect of local authorities, for example. I do not know whether local authorities feel pain in the same way as companies, or in a different way from them, but it seems to me that a clear precedent has been set.

Rob Flello (Labour, Stoke-on-Trent South)

Indeed. That is referred to as the Derbyshire principle, and I will come to that shortly.

Andrew Slaughter (Labour, Hammersmith)

I should add for clarification that that was a provision introduced by the Thatcher Government. We all thought it was another bit of vindictive anti-local-authorityism at the time, but it actually proved quite a far-sighted provision, although I will not extend my approbation to any other measures passed by that Government. If that is right, surely it is a parallel that we should look to?

Rob Flello (Labour, Stoke-on-Trent South)

I hope to develop my argument, although clearly, from my hon. Friend’s comments, it seems I have not got off to the best start. The point about the Derbyshire principle is a good one. There is the question of whether it extends to private companies working for the Government. [ Interruption. ] I hear my hon. Friend the Member for Bishop Auckland asking a colleague from a sedentary position about the Derbyshire principle, so I will take a moment to outline it.

In broad terms—I wait for the hon. Member for Broxtowe to make her customary pronouncements at this point—I understand the Derbyshire principle to be a way of preventing a local authority from protecting its reputation, following a case in which Derbyshire county council took action to do so. The outcome was that local authorities are unable to protect their reputation or their hurt feelings. Interestingly, political parties also fall under the same part of case law. A political party may well feel that it has been defamed, but it cannot take action to protect its reputation.

The second book that has graced my nightstand of late, the Joint Committee report on the draft Defamation Bill, has a lot to say about corporations. It begins:

“It is unacceptable that corporations are able to silence critical reporting by threatening or starting libel claims which they know the publisher cannot afford to defend and where there is no realistic prospect of serious financial loss.”

That goes to the heart of the problem that the new clause is designed to deal with. We have all known of such cases, or had them drawn to their attention. Companies have used their muscle—their ability to pick up the telephone to extremely well-paid lawyers—to issue letters to stop people saying what they are saying. I suspect many members of the Committee have received letters from lawyers when they have raised a topic on the Floor of the House. The subject matter may be factual, yet a lawyer’s letter, suggesting that an apology is required, will find its way to an hon. Member’s desk. We have qualified privilege. The point I make is that corporations miss no opportunity, as part of their general approach to reputation management, to issue writs left, right and centre, wherever they feel there is a way to manage that reputation.

Helen Goodman (Labour, Bishop Auckland)

Let me back up the point that my hon. Friend makes. As you realise, Mr Havard, I am a spokesman in another team, the media team. In that role, I have had a number of meetings with newspaper editors. I was very concerned about this point when the editor of a newspaper with a high reputation for business coverage told me that the receipt of threats from corporations was his No. 1 problem in providing good, accurate, truthful coverage for the public. We really do need to pay far greater attention to this matter.

Rob Flello (Labour, Stoke-on-Trent South)

Absolutely; I agree entirely. I raised a matter on the Floor of the House a couple of years ago relating to a rendering plant just outside my constituency. I knew the facts I reported were true, but that did not prevent me from receiving a letter, threatening legal action if I did not withdraw the comments. Companies seem too quick to reach for the phone, or for an e-mail, to get their lawyers to issue threatening letters.

Helen Goodman (Labour, Bishop Auckland)

On a point of order, Mr Havard. I seek your guidance. I tabled a written question with a named day for the Minister, asking about representations and discussions on the Bill. So far, I have not had an answer within the time, and it would have been helpful to have had one, in order to inform this discussion. Is there any way that the Minister could answer the question before this afternoon?

Dai Havard (Labour, Merthyr Tydfil and Rhymney)

That is not a point of order for the Chair. The Minister has heard your request and is taking advice, and will doubtless comment when he can.

Jonathan Djanogly (Conservative, Huntingdon)

I am happy to say that the named day was Wednesday. I expect to answer the written question within the time.

Dai Havard (Labour, Merthyr Tydfil and Rhymney)

Thank you, Minister. Doubtless you can incorporate some of the content in your later comments, if possible.

Rob Flello (Labour, Stoke-on-Trent South)

I am grateful to you, Mr Havard, and I look forward to my hon. Friend the Member for Bishop Auckland giving the question an airing. I hope the draft answer is before the Minister, so that he can at least give a partial answer, although I accept that as the deadline is tomorrow, he might not have a complete answer.

Andrew Slaughter (Labour, Hammersmith)

I am sorry to hear that my hon. Friend was threatened with libel action. I am pleased to say that in my time here, I have not been threatened with libel action by anyone except by my neighbouring Conservative MP. In my capacity as chairman of the all-party parliamentary group for democracy in Bahrain, I wrote to the sponsors of the Bahrain Grand Prix and asked whether they thought they were doing the wise thing. Myriad public relations agencies and everybody else deluged me with accusations of what they presumed was reputational damage. There has been a massive increase in what companies now spend, not just in advertising, but on anything that they can do about their reputation. There is a great imbalance that the clauses before us seek to redress.

Rob Flello (Labour, Stoke-on-Trent South)

Absolutely; I do not disagree for a moment, and that is a point I shall return to shortly. On the issue of imbalance, the Joint Committee report said:

“In contrast, we heard recurring evidence from other witnesses, including legal representatives and non-governmental organisations that publishers are routinely and unfairly threatened with libel proceedings by corporations who do not want negative reviews or sensitive information to enter the public domain.”

This can lead to

“publishers modifying, withdrawing, or altogether avoiding publication, which harms their freedom of speech and wider public debate. This chilling effect is caused mainly by the high cost of defending a libel claim against a well-resourced corporation that is using expensive lawyers to pursue every available method to silence the critical publisher.”

It is that inequality of arms that is the problem.

Of course, as the report makes clear, there is huge variation in the size of companies. I will come back to this shortly when I refer to specific cases, but one might find oneself up against a huge multinational company—a “McNational” company—that is able to deploy the most expensive and best of lawyers. Not that the most expensive are always the best, but such companies are able to pick and choose the lawyers with the success rates that they are looking for.

It may well be that the company is at the other end of the spectrum. I am sure that this does not apply to anyone who is here advising the Minister today, but it may be a one-person company set up by a senior civil servant to channel his salary through. There is a huge range of companies, and that is why I have tried to frame my new clause in a way that seeks to provide justice both for the smaller company that is perhaps genuinely being defamed and needs to protect its reputation, as the hon. Member for Ipswich has said, and also, at the other end of the scale, for the huge multinational that wants to protect its reputation where there is risk of serious financial loss. However, we also want to make sure that a huge multinational is not able to inflict its opinions on anybody who is not able to reach for the chequebook in the same way.

I feel particularly strongly about multinationals that are involved in exploiting the natural resources of the planet, particularly in developing countries. When somebody speaks out or publishes an article in the UK about the activities of one of these huge multinational resource-exploiting companies, the chilling effect is launched upon them, simply because the company is able to do so because of the amount of wealth that it can bring to bear. That cannot be good for free speech, or for any of the things that were discussed at Rio+20. It is just harmful, whichever way you look at it.

My new clause tries to address that wider problem. When the Minister gets to his feet, I hope he will explain the logic behind leaving this measure out of the Bill completely. There is no mention of it in the Bill, as far as I can see. We have heard, over the past week and today, the excellent work of the Joint Committee being prayed in aid when the Minister feels it is appropriate, and completely dismissed in other areas. I will not pursue the analogy of attractive fruit, but it feels as though choice cuts—to change the analogy completely—of the report have been overlooked entirely.

Dai Havard (Labour, Merthyr Tydfil and Rhymney)

I remind the Committee that with this we are considering new clause 7—Corporations —

‘(1) A non-natural person will only have an action in defamation if they can show—

(a) that the publication was published with malice; or

(b) that they have suffered actual or likely financial harm.’.

Rob Flello (Labour, Stoke-on-Trent South)

On this glorious afternoon, let us see how we can canter our way through. During the break, I reflected on a point that my hon. Friend the Member for Bishop Auckland raised about the Derbyshire principle. It occurred to me that there may be members of the Committee for whom that principle is a grey or indeed completely unenlightened area, so it is worth clarifying. It is relevant because we are effectively looking at an extension of the Derbyshire principle to corporations.

The Derbyshire case concerned the propriety of certain investments made by that local authority of moneys in its superannuation fund. The House of Lords determined that a democratically elected governmental body, including a local authority, and indeed any public authority or organ of central or local government, should be open to uninhibited public criticism and does not therefore have the right to maintain an action for damages for defamation. To allow otherwise would have an inhibiting effect on freedom of speech. The court did, however, acknowledge that if the reputation of an individual councillor or executive carrying out the day-to-day management of the authority’s affairs is damaged as a result of the defamation, that individual can himself or herself bring proceedings.

The House of Lords decision focused my mind on corporations and circumstances in which a company chief executive or a senior manager in a company might find themselves in a similar position. Again, it is worth pointing out that adverse public comment about local authority actions is common, but occasionally strays into criticism of individual officers or employees. Such criticism can be damaging for the individual concerned. The Derbyshire principle has established that a public authority cannot sue for defamation, but, if the reputation of an individual officer is impaired by a publication attacking the activities of the authority, that individual can bring a claim for defamation. There is no limit to an individual officer’s right to sue, provided that the comments refer to and defame the individual.

I am alive to and slightly concerned about a situation whereby one of the corporations that we will look at shortly tried to get round new clause 4 or new clause 7 —should the Minister in his great generosity agree to accept them—by having perhaps the chief executive of the company or the chairman of the board take the case themselves. Again, we have a situation in which the inequality of arms kicks in and the company funds the lawsuit for the chief officer, chairman or whoever. In that case, going back to what happened in the Derbyshire case and subsequent case law, the new clause would be helpful in ensuring that there was not that trespass, as it were, into such a situation. I am sure that the Minister will acknowledge that there is a possible cause for concern, but what has happened in Derbyshire should be directly comparable.

There are several examples of corporations using their might to inflict problems on individuals who are just going about their normal legitimate business. I want to draw the Committee’s attention to circumstances in which such problems might occur. For example, a company might bring a case instead of engaging in scientific debate. In the earlier part of our discussions, we looked at the very helpful clause on the protection of peer-reviewed scientific debate. At the moment, rather than perhaps entering into an academic or scientific discussion, corporations use the libel law—defamation law—to chill such discussion. Two examples spring to mind: the case of Dr Peter Wilmshurst and the case of the British Chiropractic Association and Dr Simon Singh.

For the Committee’s benefit, Dr Wilmshurst was a consultant cardiologist at the Royal Shrewsbury hospital, as I think he still is, and joint principal investigator on the clinical trial of a heart device. He was sued for libel in London by the American device manufacturer NMT Medical. Dr Wilmshurst’s comments to a Canadian journalist at a cardiology conference in the US criticising the handling of data from the trial were reported on a subscription-only American website with little readership in the UK and remained online for only three days. NMT Medical was able to launch a case against Dr Wilmshurst that it prolonged for five years, restricting discussion of the trial’s conduct. In the process, NMT Medical made defamatory allegations about Dr Wilmshurst, but, for personal reasons, he is not able to sue. Dr Wilmshurst could not avail himself of a public interest defence. He will never recover his costs. NMT Medical did not need to be able to sue for libel; it had other options, such as an action for malicious falsehood or simply entering into the scientific discussion. The UK charity HealthWatch launched a fund to support Dr Wilmshurst, and a little while ago, NMT’s UK solicitors entered mediation.

Andrew Slaughter (Labour, Hammersmith)

Presaging a debate we will have later this afternoon, as a defendant, rather than a claimant, Dr Wilmshurst was the beneficiary of a conditional fee agreement. Does my hon. Friend agree that, whatever the Government’s view of CFAs, which no doubt we will hear later, CFAs can prevent oppressive behaviour towards defendants of limited or impecunious means, such as Dr Wilmshurst?

Rob Flello (Labour, Stoke-on-Trent South)

Absolutely. I look forward to my hon. Friend’s comments on new clauses 10 to 13 later this afternoon.

Helen Goodman (Labour, Bishop Auckland)

Notwithstanding the remarks of my hon. Friend the Member for Hammersmith, surely the point on the disparity in resources between an ordinary citizen and a corporation is that a person who might in normal life be of above-average income and wealth, and therefore not entitled to legal aid, is much poorer in a dispute with a large corporation. That is why we need a set of rules to address such situations.

Rob Flello (Labour, Stoke-on-Trent South)

I agree entirely with my hon. Friend. The wider implication for people such as Dr Wilmshurst is that their reputation is potentially at risk—as I said, defamatory comments were made about Dr Wilmshurst— and their livelihood and personal financial position are at risk due to unrecoverable costs. The greatest reputational risk that Dr Wilmshurst faced as, I am sure, a thoroughly decent, good and upstanding member of society, was that he was under pressure to retract what he had said. We cannot have situations whereby a corporation, because of its size, deep pockets and ability to throw its weight around, can have people withdraw or lie just to stop themselves being dragged through the court at huge cost. That is potentially dangerous.

Andrew Slaughter (Labour, Hammersmith)

To clarify the point raised by my hon. Friend the Member for Bishop Auckland, in using the word “limited” I meant not “modest” but a contrast with “unlimited”. The Murdochs and the international corporations of this world can use costs as a weapon by saying, “We will discuss costs later.”

If this method of balancing the two sides of the equation and ensuring that there cannot be oppression by large corporations is more attractive to the Government, they would be well advised to seize on these new clauses.

Rob Flello (Labour, Stoke-on-Trent South)

I am grateful for that enthusiastic support for my new clauses. At the moment, justice is effectively for sale to whoever has the largest pot of gold. For the unfortunate person sued—no matter how eminent, learned, able to make the case and prove correctness—huge corporations can still use legal proceedings instead of entering scientific debate.

The second case I referred to occurred in 2008. The British Chiropractic Association launched a libel case against science writer Dr Simon Singh, following an opinion piece he had published in The Guardian, concerning a lack of evidence for claims that chiropractic can be used to treat childhood colic and asthma, and the related conduct of the BCA. The Guardian withdrew the article and offered the BCA the right to reply, which it did not take. Instead, it decided to sue Dr Singh. BCA dropped the case after two years of extended and expensive legal argument, when the Court of Appeal ruled that Dr Singh could use the defence of fair comment.

Despite winning, Dr Singh will never reclaim all his costs. A common-law public interest defence was not available to Dr Singh, which meant that the case was bogged down in the exact meaning of his words and whether he could prove the truth of the claimant’s asserted meaning. I am sure that the Minister will say that the Bill would now give Dr Singh that defence. Leaving hanging the question of whether it would or would not, if corporations can stifle scientific debate by firing off letters from lawyers and starting libel or defamation cases, we will still have the situation whereby the Dr Singhs of this world may find themselves several months or years down the line without resolution of their cases while incurring costs. That could all be solved quite easily by adopting new clause 4 or new clause 7.

Let me move on to the second concern, where proceedings are started but material is withdrawn before they are made. Again, with the cost of defending a libel case so high, even when successful, and the possibility of losing and having to pay all costs quite likely, relatively few cases reach court. Under current law, early strike out can take months and costs tens of thousands of pounds. Even trivial or weak threats can lead to withdrawal of the publication. Scientists have reported that they, their editors or publishers have withdrawn articles and sometimes apologised for material that the scientists stand by but they or the publishers cannot afford to defend.

Examples include the editor of a newsletter of a health charity who withdrew an article criticising claims about umbilical-cord blood banking after the company concerned threatened libel action. There were similar concerns about a threat to sue the writer personally after she spoke of her concerns about the company’s claims on a BBC radio programme. The author and editor of the newsletter were uncertain how a case would proceed and could not take the financial risk of defending their words against a large company.

Another example is a scholarly review of a new specific type of lie-detector technology, written by two professors of linguistics at Swedish universities and published in the International Journal of Speech Language and the Law in 2007. That was also withdrawn after a libel threat from the manufacturer, a large corporation with deep pockets, able to intervene and take action. That again shows that the new clause is vital.

Helen Goodman (Labour, Bishop Auckland)

The last example my hon. Friend gave is of particular interest. That kind of lie detector was being tested by the Department for Work and Pensions when I was a Minister there. My officials said that they thought it would work, but I said that I had read criticism of the lie detector. They said that I could ignore that. The ramifications are immense if we do not get down to the truth. It is not simply a question of truth and untruth; vast amounts of public resources could be wasted if we do not know the truth of the case.

Rob Flello (Labour, Stoke-on-Trent South)

Absolutely. In many cases, it is a matter of life and death. Take a situation—similar to the Wilmshurst case—in which a heart valve is developed by a major manufacturer who has invested a lot of time and money in it. An eminent specialist then says that, under certain circumstances, the valve can block and cause the death of a patient.

Currently, the corporation, which has invested lots of money, could say to the person publishing that paper: “If you do this, we will sue you.” I appreciate that the Bill talks about peer-review papers, but there may be something about which the specialist is so keen and concerned, and wishes to get into the public domain quickly while the peer review is happening, that the publisher ends up having to withdraw and publish an apology while the peer-review process is going on. There are huge concerns about this. As my hon. Friend the Member for Bishop Auckland has said, the Israeli lie–detector manufacturer threatened the publisher with legal action for defamation and the publisher withdrew the article. How can this help anybody?

Rather than pursuing these actions, often letters are sent and threats are made, even when they are not legally sound. Many letters threatening libel action are not legally sound, but access to expert legal advice is not always available and non-legal threats often lead to that unnecessary chilling of scientific or medical discussion. It is very difficult for the Committee this afternoon to know how many non-legal threats result in withdrawing material. I will give a couple of examples. A plastic surgeon, Dr Dalia Nield, was sent a letter by lawyers for a company threatening further legal action if she did not withdraw comments published in the Daily Mail about boob job cream. The manufacturers, Rodial, claimed it could increase breast size. Dr Nield said Rodial had not provided a full analysis of tests on the cream. Again, there was threat of legal action, which had untoward consequences.

A science writer, Martin Robbins, received a letter threatening unspecific legal action from a vitamin pill manufacturer, Principle Healthcare, about a series of posts criticising claims that the company made about its products. The letter told Robbins that he had seven days to remove the blog before legal action would be taken. He sought legal advice from readers of his blog and wrote to Principle Healthcare, asking it to clarify the complaint. There was no response and the posts remain accessible. Again, it illustrates that, all too often, companies are reaching for their lawyers’ phone number or e-mail address, and firing off threats of legal action or actually taking legal action.

I also want to refer to something I came across only a few hours ago. A citizen journalist received a bizarre letter from lawyers who claimed to be acting on behalf of the Olympic Delivery Authority, alleging,

“serious, false and defamatory allegations”,

against the authority and one of its employees. The blog article was published on the Indymedia website and covers the eviction and arrest on 10 April of protesters campaigning against the construction of the Olympic basketball training courts at Leyton Marsh in Waltham Forest. The letter demands that a phrase be removed from the blog immediately, and made unspecified threats that if it remains published,

“you may well leave our client no option but to take matters further”.

The accusations of defamation imply that the ODA would initiate a libel action, but public authorities are barred from using libel, on the Derbyshire principle, as I outlined earlier. A Government authority cannot sue for libel on behalf of itself, or, as I understand it, on behalf of its employees. Employees themselves, of course, can sue. Other cases then came to light, in which it appears that the Olympic Delivery Authority tried to prevent criticism about the effects of the work that has gone on. Clearly, there are cases out there of companies using threats of libel action, even when they cannot take the action that they have threatened.

The final area that I want to highlight is what has been called editorial spiking. Perhaps unsurprisingly to members of the Committee, particularly to those who have served on the Joint Committee on the draft Bill, medical and scientific journals regularly and frequently consult libel lawyers and sometimes do not publish material in order to avoid perceived libel risks.

A survey of journal editors was undertaken a couple of years ago to gauge the extent of editorial spiking. The main results were that, first, journal editors in all subject areas have been threatened with libel; almost a third of the respondents said that their journal had been threatened with libel action. Secondly, editors modify papers before publication; some 44% of respondents said that they have asked for changes to the way papers or articles were written to protect themselves from libel action. Thirdly, scientific editors have refused work for fear of libel action; some 38% of respondents have chosen not to publish certain articles because of a perceived risk of libel action, for example about controversial subjects or concerning particular people or companies. Finally, both peer-reviewed and non-peer-reviewed content, including editorials and commentary, news, letters to the editor and book reviews, was being chilled. It seems that legal advice is always being taken in order to play it safe. Self-censorship is going on. Never mind corporations starting legal action; merely the fear that they may start an action is enough for self-censorship to be rife out there.

We are trying to restrict corporations in the use of libel laws. I completely accept that corporate claimants and other non-natural persons should be able to use laws where they have actually been defamed, but they should not be able to use them just to manage their brands. They should not be able to use defamation law just because someone says something about them that they do not like, even though it is absolutely true and justifiable. There is certainly widespread support for restriction on corporations’ use of defamation.

I referred earlier today to “Mc” corporations looking at and using defamation laws. I want to return to that and talk about the case of McDonald’s Corporation v. Steel and Morris, which came to be known as the McLibel case. McDonald’s Corporation filed a suit against environmental activists Helen Steel and David Morris, who are often referred to as the McLibel two. The case concerned a pamphlet that they had produced that criticised the company. The original case lasted 10 years, making it, as I understand it, the longest running case in English history. Even though McDonald’s won two hearings in English courts, the partial nature of its victory, the David versus Goliath nature of the case, and the drawn-out litigation were in some ways just as damaging to its brand as anything else. The case was then taken to the European Court of Human Rights, where it was found that the provisions of articles 6 and 10 came into play.

I was going to talk about a couple of other cases, but I am conscious that time is pressing on. Just for the Committee’s reference—it may wish to refer to this later—there was the case of GE Healthcare, a US corporation. It dropped a controversial defamation case against a scientist who had criticised one of its drugs. In dropping the case, the firm said that it did not intend to stifle academic debate. Nevertheless, it shows again how willing and ready companies are to reach for defamation lawyers first, rather than taking a more measured and considered view.

The purpose of new clause 4 is to ensure that companies realise that they must convince the court before they can reach for the libel lawyers. It would give protection and reassurance to all the folk I have cited so far, and to the hundreds—possibly thousands—of bloggers, scientists, academics and journalists who know that writing something about a company or a corporation will bring them immediately into the firing line of people who have far greater resources than they could possibly hope to command.

I turn again to one of my favourite tomes, the Joint Committee report, and I draw the Committee’s attention to the discussion of corporations on page 57. It is lengthy and detailed, so I will not go through it in detail, but I hope that members of the Committee have studied the report hard and taken it on board. I draw the Committee’s attention to paragraph 109, which states:

“In contrast, we heard recurring evidence from other witnesses, including legal representatives and non-governmental organisations that publishers are routinely and unfairly threatened”.

I read that out earlier, so I will not repeat it. There is certainly a chilling effect, because companies have access not only to defamation law but to the resources that they need to use it.

New clause 4 would require a corporation to obtain the permission of the court before bringing a claim for defamation. If a corporation felt that it had genuinely been defamed and that a serious problem had to be addressed, it should not fear that requirement. The corporation would be able to approach the court and obtain permission to bring the defamation action.

The new clause sets out some of the matters that the court would have to look at in determining whether to grant permission. First, is there an arguable case? In many of the examples that I have cited, there clearly was not an arguable case, and the courts should be able to strike such cases out quickly and easily. If the court believes that there is a case to argue, it can give permission. Secondly, are there alternative means of redress? Organisations such as the Libel Reform Campaign have highlighted that companies can take other actions, such as making a malicious falsehood claim. That question should focus a company’s mind on whether the matter should really be the subject of a defamation claim, or whether the company can seek an alternative form of address that would not involve dragging somebody through a lengthy and expensive court case to protect their reputation.

Thirdly, what is the size and area of operation of the company? If an allegation was made against a small corner shop that had a real impact on that shop’s business because of its size and area of operation, the court might well grant permission for that case. The court might not, however, grant permission to a huge corporation on the carcase of which an allegation had barely the impact of a mosquito bite. Fourthly, what is the proportionality of allowing the corporation to bring a claim, by reference to the likely costs of the proceedings? If the corporation is likely to suffer a miniscule amount of harm as a result of the matter, would the cost of a huge, drawn-out, 10-year legal case be proportionate?

That explanation of the structure of new clause 4 brings me nicely to new clause 7, which is a simplified version of new clause 4. New clause 7 says:

“A non-natural person will only have an action in defamation if they can show (a) that the publication was published with malice; or (b) that they have suffered actual or likely financial harm”.

This is much simplified, more straightforward—it simply asks whether there is malice or actual or likely financial harm. It does not go through all the things that new clause 4 looked at—the impact on share prices; the costs of restoring the brand—it simply looks at those two points.

I shall pause and delve more deeply into “likely financial harm” in both new clauses. My concern in drafting these was whether a corporation of whatever size would be able to manipulate its balance sheet and profit figures, and use clever creative accounting to show an “actual or likely financial harm”. The problem is that it may well be able to do those things, but that is why, in new clause 4, getting the permission of the court is important. A court can take into account whether the balance sheet or the profit and loss figures have been manipulated to show actual or likely financial harm.

New clause 7 reflects the view of the Libel Reform Campaign, which feels that courts should not entertain libel or defamation actions from corporations at all; that it should be far more restrictive. I am hesitant about new clause 7 because I think that there are circumstances in which a non-natural person, as we have discussed, should be able to bring a case where there is genuine defamation and actual or likely financial harm. So I am testing the water with new clause 7, to see whether it is a step too far, or whether it is something that should be looked at.

I have not tested the Committee’s view—but this is an appropriate place to do it—on the situation in which a corporation is acting for a Government body, but is not caught by the Derbyshire principle. There is one company that springs to mind, and my hon. Friend the Member for Newcastle-under-Lyme will immediately recognise the heartfelt sentiment with which I say the word “Serco”, remembering our experience in north Staffordshire with that company and its activities regarding our children’s education and schooling. There is a host of companies out there doing work for Government, in many cases standing in stead of a local authority, but which it is not possible to criticise in the way one could criticise a local authority and know that the Derbyshire principle applies and protects free speech, effectively, against Government. Where a private company is standing in stead of a local authority, clearly such a challenge is not possible.

Indeed, people have made representations to me who are concerned about the organisation Atos, which undertakes assessments on behalf of the Department for Work and Pensions. Allegations have been made to me that Atos has reached for the lawyers when blogs have made statements about how that company has operated and behaved, irrespective of whether there is merit in what they are saying. If it were the DWP doing those reviews, there would be no recourse, but because Atos is standing in the shoes of the DWP, it can reach for the lawyers and take action.

Helen Goodman (Labour, Bishop Auckland)

My hon. Friend has made an absolutely brilliant point. He is highlighting the loss in public accountability when public services are privatised and contracted out. Does my hon. Friend agree that that loss is deeply damaging to our democracy?

Rob Flello (Labour, Stoke-on-Trent South)

Not only do I agree, but that was the point I was about to come on to. Over the past 20 years or more, we have seen the increasing engagement of the private sector. I suspect that we will see a massive growth—I am sure that the Minister will not take the bait on this one—in the number of private companies getting involved in delivering services, particularly for the national health service.

Helen Goodman (Labour, Bishop Auckland)

My hon. Friend has put his finger on something significant, and that point is paralleled by the fact that we cannot recover information through parliamentary processes because we are constantly being told that it is commercial in confidence.

Rob Flello (Labour, Stoke-on-Trent South)

My hon. Friend makes an extremely valid point. It is increasingly difficult to get information to hold private companies and corporations outwith Government to account, and if anybody puts their head above the parapet outside of the privilege we have in this place—there was a question on Tuesday about whether that privilege will continue, and I know the House is looking at that—the danger is huge. If even Members of Parliament cannot question what is happening with private corporations acting on behalf of the Government—

Helen Goodman (Labour, Bishop Auckland)

Using taxpayers’ money.

Rob Flello (Labour, Stoke-on-Trent South)

Absolutely. They are using taxpayers’ money, effectively standing in for the Department, Government agency or local authority concerned, but without the ability to be questioned. When bloggers and journalists rightly want to start digging into them in a responsible way, raising questions, they will be shut up by firms and corporations saying, “Sorry, but you have defamed us. Here is our writ.” We have to stamp on that quickly.

When the Minister responds on new clauses 4 and 7, I hope he recognises that a huge danger lies before us, which will grow as more companies get involved, whether in the NHS, or in other areas of Government and local government business. Companies are becoming increasingly involved and unless we tackle the issue of corporate bodies through the Bill, we may well find in a few years’ time that they are completely untouchable. Despite the level of Government money that they receive, we may be unable to bring them to account, because as my hon. Friend says, we cannot question them. When anybody dares to say anything, they will fall back on the provisions in the Bill, after it is enacted, and produce their get-out-of-jail free card.

The Committee probably has the gist of where I am coming from on the two new clauses. I certainly hope that Committee members have looked at the Joint Committee report, but if not, they probably have a few moments to do so. It is a glaring error that should have been addressed in the Bill, and I do not understand why it was not. I am sure the Minister will give me an extremely good explanation, but I do not stand alone on that issue. A huge number of people out there cannot see why corporations were not included, and this is the opportunity for that to be put right.

Tom Brake (Liberal Democrat, Carshalton and Wallington)

I shall go over much of the same ground as the hon. Member for Stoke-on-Trent South, but I intend to do so much more concisely, as the Committee will be pleased to hear.

It looks as though there may be an alternative, albeit possibly a transient coalition, building up around the issue of corporations. That is an omission, and the opportunity should have been taken to consider restricting corporations’ ability to use libel laws in the way that the hon. Gentleman has described. There is often a David and Goliath scenario, and the right hon. Member for Rotherham might be raising a more topical David and Goliath case than others that have been mentioned.

Kwasi Kwarteng (Conservative, Spelthorne)

There is this distinction: my understanding is that the David and Goliath case referred to by the hon. Member for Stoke-on-Trent South was won by McDonald’s.

Tom Brake (Liberal Democrat, Carshalton and Wallington)

I thank the hon. Gentleman for his intervention, although I am not quite sure what his point was.

Denis MacShane (Labour, Rotherham)

About big burgers.

Tom Brake (Liberal Democrat, Carshalton and Wallington)

It is probably safer for me to pursue my points, although there may be other interventions about David and Goliath cases.

Paul Farrelly (Labour, Newcastle-under-Lyme)

Further to the previous intervention, McDonald’s did indeed win, but—after nine years—it was awarded £40,000, which it declined to collect.

Tom Brake (Liberal Democrat, Carshalton and Wallington)

One has to speculate on the reputational damage incurred by McDonald’s along the way, in achieving that win.

As was outlined by the hon. Member for Stoke-on-Trent South, corporations have many other legal avenues to pursue. I made this point last week, and I will repeat it: I wonder whether any corporations have made representations against what we are discussing. If they are happy, I want that to be on the record, so that their exact objections, if any, can be known. The view of the Libel Reform Campaign, and my view, is that if corporations are allowed to use libel laws in such a way, they must show that there is actual or likely serious financial harm and malice, dishonesty or reckless disregard for the truth.

Helen Goodman (Labour, Bishop Auckland)

The right hon. Member’s point about representations was what I raised in my question to the Minister. If the Minister has managed to get that information on a slightly faster timetable, does the right hon. Member agree that it should be shared with the Committee?

Tom Brake (Liberal Democrat, Carshalton and Wallington)

I agree with the hon. Lady that that would be helpful. What is unusual about our discussion on corporations is that all the arguments are coming from one side. It is rare that we have a debate where there are no representations from the other side. One can draw conclusions from that, and mine is that corporations are not particularly bothered whether the Government make the changes we are seeking.

Rob Flello (Labour, Stoke-on-Trent South)

To turn that on its head, if restrictions in line with my new clauses 4 and 7 had been included in the Bill, I suspect we would all have been deluged with representations from corporations.

Tom Brake (Liberal Democrat, Carshalton and Wallington)

I suspect that corporations have sufficient parliamentary advisers to keep track of what is happening. They will be aware that this is a subject of debate, and they may have wanted to pre-empt things by making representations to prevent the introduction of proposals such as those in the new clauses.

My final point is on the Derbyshire county council case, which has been mentioned. I understand that it has set a common law rule that public sector bodies cannot sue in libel because they do not have article 8 rights in reputation and therefore do not need the same remedy as natural persons, and because of the public interest in not chilling free debate about the conduct of powerful organisations. It seems to me that those criteria should also apply directly to corporations.

If, for some reason, the Government feel that that cannot be conceded, could they at least envisage applying the cut-down version referred to by the hon. Member for Stoke-on-Trent South? That version would ensure that private providers have to play by the same rules as public providers on public services—a matter which I have raised in relation to the Independent Police Complaints Commission and freedom of information—and it would mean that there was a level playing field between the two types of providers.

Denis MacShane (Labour, Rotherham)

I have a modest experience of such matters. I wrote a book many years ago, which was quite profitable—the only one that was not remaindered and did make some money—in which I referred to the Institute of Journalists in derogatory terms. I was shocked to find that as a body corporate it could sue me. Because my publisher was a left-wing publisher, it immediately surrendered and I lost all the profit. [ Interruption. ]A long time ago, yes—a left-wing publisher.

I am concerned that as the Bill progresses, we have an extraordinarily egregious example of exactly the points that the shadow Minister, my hon. Friend the Member for Stoke-on-Trent South, covers in his new clause, and that is the news that the law firm Schillings is showering defamation writs on the citizens advice bureau—one of the most prestigious and respected of all the voluntary organisations that we all have relationships with—as well as the law firm Bates Wells and Braithwaite, the Justice Gap website and the consumer websites Legal Beagles and Consumer Action Group.

Why is Schillings doing that? It is because there is an extremely unpleasant practice now taking place in our retail industry—developed, I am sad to say, under a Labour Government—called civil recovery. In essence, 90% of all shoplifting in our stores is organised by gangs. About 8% or 9% is done by in-house stealing. The tiny 1% is done—frankly, for the most part—by rather sad people. I am not condoning shoplifting; none of us would. Quite a lot of people who walk out of Tesco or Boots have not put in the correct barcode. We have all had that problem now since we have had to, as it were, do our own till accounting. Then the people are pulled back into the shop, taken into a little room and told that they could face prosecution, but Tesco, TK Maxx, Boots or Primark will not prosecute. Instead they will ask for names and addresses and a few weeks later a company in Nottingham called Retail Loss Prevention, which is owned by one person—Mrs Jackie Lambert—sends a threatening letter to the person saying that unless they immediately pay £150 or £180, they may face prosecution.

Most of the people are children or adolescents, often from families without much structure. They are terrified out of their wits. Retail Loss Prevention—this Jackie Lambert person—says that this practice has been approved by the Association of Police Chief Officers and is thoroughly legal. It is not. It is a threat to obtain money, because the point of detention is not to go forward and hand the shoplifter—if that is the case, and we are not condoning it—over to the police for prosecution. There have been 750,000—

Dai Havard (Labour, Merthyr Tydfil and Rhymney)

Order. Can you explain how your speech fits with the question of defamation?

Denis MacShane (Labour, Rotherham)

Quite. This is exactly the core of the point. This is a £15 million racket used by a lot of major companies—corporate groups—such as Boots, TK Maxx, Primark, Debenhams, Superdrug and Tesco. They are all shops that we use. These bodies corporate are going to another body corporate called Retail Loss Prevention and getting it to obtain money from very vulnerable people. When the CAB, also a body corporate, seeks to take up the cases, it then faces defamation writs from Schillings. I am sorry if any member of the Committee does not see the seriousness of the matter and why we should stand with the vulnerable people in our society rather than the Nottingham company and its use of Schillings to put pressure on the CAB.

David Morris (Conservative, Morecambe and Lunesdale)

The whole point of scrutinising the Bill is to find out where we can improve it instead of going over old turf.

Denis MacShane (Labour, Rotherham)

I would certainly welcome that, but until Government Members understand exactly what is going on, they will continue to support the Government’s rejection of the new clause tabled by my hon. Friend the Member for Stoke-on-Trent South. We have a Standing Committee in order to go into the problems of the case in much greater detail than is allowed on Second Reading.

Here we have an example, before our very eyes, at this very time, of Schillings acting on behalf of one body corporate and companies that hide behind the Nottinghamshire-based company and Mrs Lambert. They seek to extract an estimated total of £15 million from poor and vulnerable people.

I am sorry that the right hon. Member for Bermondsey and Old Southwark is not present—he is obviously busy—but he has raised that point in an Adjournment debate in Westminster Hall. I know that the right hon. Member for Carshalton and Wallington is also aware of that case, so this is not a point of view from just the Labour side of the Committee.

As the company now realises that the CAB and other organisations are defending weak and vulnerable people, they have initiated one or two court cases for shoplifting, only to find that they are being thrown out by the High Court.

Anna Soubry (Conservative, Broxtowe)

It is theft.

Denis MacShane (Labour, Rotherham)

The hon. Lady says from a sedentary position that it is theft. If it is theft, the store has an obligation to call the police, have the person arrested, provide the evidence and prosecute the person. They are not doing that, but sending people home and seeking to extract money from them later on.

Rob Flello (Labour, Stoke-on-Trent South)

Despite the interjections of the hon. Member for Broxtowe, I am following what my hon. Friend is saying. The situation, as I understand from what he was saying—I would like his clarification on this—is exactly was I was talking about when moving new clause 4. Companies throw their weight around and are quite happy to reach for letters to threaten all sorts of things, whether or not they can do it. What he is talking about is symptomatic of a problem with corporations, which, even if the law is not on their side, they will make up as they go along.

Denis MacShane (Labour, Rotherham)

It is no accident that the practice, which is quite widespread in America, was unknown in Britain until 1998. It started with the arrival en masse in our high streets of TK Maxx and Superdrug, two American companies. One should congratulate Mrs Lambert in Nottingham for having realised what a wonderful little earner that is.

I have no problem with making any shoplifter or anyone who steals anything face the legal consequences. What is wrong, in my judgment, is for Schillings to be suing the CAB—my goodness! I think all hon. Members will accept that in every one of our constituencies, the CAB is having to shed staff and operate on a reduced basis due to financial constraints. To make it undertake the responsibility of defending a worrying set of defamation writs from Schillings, acting on behalf of the Retail Loss Prevention company and some of the most powerful corporations in our land, is a grotesquely unfair and improper abuse of existing defamation law.

That is why I hope hon. Members on both sides of the Committee will accept the new clause tabled by my hon. Friend the Member for Stoke-on-Trent South. It would not stop the bullying in toto, but it would at least send a much clearer signal to big companies such as TK Maxx, Tesco, Primark, Superdrug and Boots, and to Retail Loss Prevention that their little game is over. If they find someone who has committed a valid shoplifting crime, they should call the police and bring the people before the courts. They should not use that underhanded way to achieve their aims and use Schillings, a defamation lawyer, to put pressure on the great and good organisation that is the CAB to stop it raising the issue in public.

Tom Brake (Liberal Democrat, Carshalton and Wallington)

Is the right hon. Gentleman as concerned as I am about the following aspect of the letter? It is the suggestion that the company has encountered substantial financial losses as a result of a small number of postings on a website that I think is relatively obscure.

Denis MacShane (Labour, Rotherham)

Once again, we have the bullying side of defamation writs. CAB is probably the best known of those threatened by Schillings. On the whole, it is big enough, old enough and reasonably resourced enough to look after itself. We have, thank goodness, lots of wonderful little consumer groups producing websites, and maybe here and there getting a techie bit wrong, that are terrified out of their wits when big bully Schillings sends in a letter on behalf of Mrs Lambert in Nottingham.

I hope that all parts of the House will consider this. I think the Minister himself when the matter was debated on Adjournment—I do not know if the Minister would like to listen to me [Interruption.] From a sedentary position, we have the courtesy we are used to from the party two years into power. The Minister said in the debate that he hoped that there would be a test case and I appreciated his words. People concerned about the matter felt he was on their side. Therefore, I hope he will be prepared to accept my hon. Friend’s new clause and allow the pro-consumer groups around the world to carry on their business without fear of defamation writs from Schillings.

Ben Gummer (Conservative, Ipswich)

The hon. Member for Rotherham—

Denis MacShane (Labour, Rotherham)

Right hon.

Ben Gummer (Conservative, Ipswich)

I apologise. The right hon. Member for Rotherham raised an important point that deserves consideration. I wish he had spent some time with me queuing overnight for private Members’ Bills, because I am sure one on this topic would have been very popular in the House. However, it is not one that necessarily finds its place in the Defamation Bill. The right hon. Gentleman appealed to the Committee; in turn, I appeal to Opposition Members to think carefully before they vote on this new clause.

It is difficult to know where to start with the new clause, as it is such a jumble of assertion and assumption, with general principles drawn from anecdotes. I will look at one or two aspects where hon. Members might feel—[Interruption.]

Dai Havard (Labour, Merthyr Tydfil and Rhymney)

Order. A little decorum, please.

Ben Gummer (Conservative, Ipswich)

Thank you, Mr Havard. I want briefly to draw out a few points on which the Opposition might want to reflect before they say aye to the new clause. Proposed subsection (1) says,

“Before bringing a claim for defamation, the body corporate shall obtain the permission of the court.”

One of the considerations is to “demonstrate an arguable case”. That would be the first time in English law since Magna Carta that somebody would have to prove to the court before the case is heard that the facts and the argument are admissible. Clause 40 of Magna Carta says that the state should not

"refuse or delay right or justice",

or access to justice in any form. Yet here for the first time, for some reason, a corporation, no matter how good or evil, must show it has an arguable case before the court will even hear it.

Rob Flello (Labour, Stoke-on-Trent South)

Will the hon. Gentleman give way?

Ben Gummer (Conservative, Ipswich)

I shall finish my comments quickly. The hon. Gentleman spoke at great length. I just want to make a few points that I wish his colleagues to listen to. This would be the first time that this has been in English law. Consider that for a moment.

Proposed subsection 4(c) would exclude loss as a consequence of a fall in share price. I put this hypothetical but not completely unrealistic proposition to the Opposition. Imagine a hostile takeover position of a company that might have a significant employee trust that holds shares in the company, where a significant part of the pension fund of that company’s employees holds shares in the company. Imagine that a defamatory comment is made that changes the company’s valuation on the eve of the sale, and that the hostile takeover therefore happens at a lower price than would otherwise have been obtained. The people who lose are not the evil shareholders, or the evil management of the big, bullying corporations that the shadow Minister seems to think exist without any employees or owners, but the employees, the shareholders, some of whom will be very small. They will be the people on low incomes with investments in pension funds that hold shares in the company, and the employees in the employee trust. They will lose out because of the new clause and will not be able to take action to correct the defamation. Those companies are not just the evil Schillings, and the rest of them; they might be Marks and Spencer, Debenhams or the Co-op, which exists to make a profit, albeit that it disburses that profit to its owners. [Interruption.] No, I will not take an intervention. I will conclude my comments.

Proposed subsection (5) excludes from this bizarre new clause organisations that exist not to make a profit, including, I presume, charities.

Rob Flello (Labour, Stoke-on-Trent South)

The hon. Gentleman should read the new clause. It excludes charities.

Ben Gummer (Conservative, Ipswich)

The new clause says that

“it does not extend to charities”,

but it also says that it does not apply to bodies not trading for profit, so the Church of Scientology, which is keen to take defamation actions, as Opposition Members know, would still be able to take action as a body corporate, but not the Co-op, Marks and Spencer, or Tesco, which employs 350,000 people in this country—far more people than are represented by any trade union on its own. Is that right? Is it right that Tesco and all its employees, and the families and people whom it supports, should be exempted, but not the Church of Scientology?

Opposition Members should think carefully before supporting the new clause. They should think about what the new clause says about their party. The new clause blows their cover. They care about profit, not the many hundreds of thousands of people whom businesses employ, and whose jobs depend on the good reputation of their company. If that reputation is destroyed, their jobs are at risk. Opposition Members should remember that before they vote for this new clause.

Helen Goodman (Labour, Bishop Auckland)

I listened carefully to the hon. Gentleman, and I will speak in support of new clauses 4 and 7 in the name of my hon. Friend the Member for Stoke-on-Trent South, which is not to say that the drafting of new clause 7 could not be improved. The hon. Member for Ipswich made some pertinent points about the Magna Carta, but our concern is that in the public debate on defamation in this country, the most significant and well known problems involve small people, however defined, and large corporations. The Bill’s lacuna in not addressing large corporations is striking.

My hon. Friend the Member for Stoke-on-Trent South talked about a large number of cases, but he did not talk about the Trafigura case, which I thought was the most well known. Those of us who laboured on the Legal Aid, Sentencing and Punishment of Offenders Bill know that Trafigura is adept at using and abusing the law in every respect. First, it had to defend claims made by people in Ivory Coast. Then, in May 2009—this is relevant to the Bill—it sued the BBC over allegations made on “Newsnight” that the hazardous waste dumped by Trafigura in Ivory Coast caused deaths and miscarriages. In December 2009, the BBC settled out of court, with Trafigura paying £25,000 to charity and issuing an apology. It has been reported that the reason behind the BBC’s decision to settle was the fear that Trafigura’s lawyers, Carter- Ruck, could run up legal bills of £3 million, for which the BBC would be liable if the case did not go its way. My hon. Friend the Member for Newcastle-under-Lyme will no doubt talk about the injunctions that were issued.

Paul Farrelly (Labour, Newcastle-under-Lyme)

I tabled a parliamentary question on Trafigura because of the substantial concerns raised about public interest. If I catch your eye later, Mr Havard, I will not talk about that, but I do want to put on record my sadness that the BBC settled that case when it had the wind of public interest in its favour, given that The Guardian and other organisations had stood up to Trafigura.

Helen Goodman (Labour, Bishop Auckland)

I am grateful for my hon. Friend’s insight into that case.

We should also be concerned about another large organisation, Atos, given the huge involvement it now has in the delivery of our public services, and how it had the Carer Watch web forum taken off the internet. It made no direct contact with Carer Watch but instead went straight to the web hosts, who removed the forum. Notwithstanding the strong feelings of the hon. Member for Ipswich, we need to address imbalances of power. I am surprised that the Government have ignored the Joint Committee, which looked thoroughly at the matter and recommended that the Bill incorporate provisions along the lines of those proposed by my hon. Friend the Member for Stoke-on-Trent South, and I would like to hear an explanation from the Minister. I have raised the issue of from whom representations have been heard. As the right hon. Member for Carshalton and Wallington said—I hope he will vote for the new clauses—it is significant that public bodies may not bring defamation cases. In the case of public bodies, however, the general public have, through the ballot box, the possibility of changing their management and governance. They do not have that opportunity with large private corporations, yet the influence that such corporations can wield in our society can sometimes make them just as significant. The hon. Member for Ipswich made a point about the amount of jobs they create; that illustrates their power, influence and significance, and actually makes the opposite case. The fact that they make a major contribution to the British economy is not a reason not to have the power to look at their activities.

I assume that my hon. Friend the Member for Stoke-on-Trent South—he will no doubt correct me if I am wrong—has taken up the point made in the Joint Committee report that trade associations should be covered. Otherwise, there would be a legal loophole: private corporations would simply create trade associations.

The other issue that stands out in the cases that have come to public attention is how many of them are about scientific matters. I fear that clause 3 will not be adequate, because it refers to scientific journals. We have heard, however, that it is when attempts are made to communicate with the general public through ordinary newspapers—to popularise opinions, and to explain to the ordinary citizen what is going on—that large corporations use existing defamation law in such an oppressive way. Even if the Minister does not like the drafting, I hope that he will go away and think about the matter, and return on Report with something that he believes will work.

Simon Hughes (Liberal Democrat, Bermondsey and Old Southwark)

I apologise because I had to go out during some of the debate, but I was here at the beginning.

Dai Havard (Labour, Merthyr Tydfil and Rhymney)

I understand, Mr Hughes.

Simon Hughes (Liberal Democrat, Bermondsey and Old Southwark)

I rise to speak on the issue that lies behind the new clause. I have initiated Adjournment debates in the House on Retail Loss Prevention, and have worked with colleagues in the Lords on the matter, and I have had several meetings about it over the years with Richard Dunstan of Citizens Advice.

I remain concerned that power is abused by large retail outlets, which use a regular set of solicitors to protect their interest. They pursue normally young and often vulnerable people for small amounts of money, and lead them to believe that other consequences will flow if they do not pay, even though that is not true under the law. Effectively, retail outlets often get large sums from such individuals. If, for example, someone has left a store with a comb or a tube of toothpaste, they are told that unless they pay considerably more than the value of the property—£100 or sometimes £1,000, which accumulates very quickly—they will be guilty under criminal law.

Of course, retailers have to protect stores and the goods in them; I understand that. It is perfectly reasonable for stores to have security people, as long as they act reasonably. There is a real issue here, however, and there is a social malaise in how such companies pursue their interests. Some quite reputable companies are involved, as well as some disreputable ones.

It is clear from correspondence that Schillings, which has written about the case, is trying to represent Mr Dunstan as someone who is on a frolic of his own, pursuing something disreputably, obsessively and almost paranoically. He has been doing a job for a highly reputable organisation, Citizens Advice, with which I have worked over the years and on behalf of which I once sponsored somebody to work with me here. We all know from experience in our constituencies that Citizens Advice has at heart only the best interests of those who come through its doors. I simply want to ask how we stop the big boys and girls attacking the little boys and girls with the back-up of lawyers, who intimidate them and misrepresent the legal position.

In answer to the hon. Member for Bishop Auckland’s challenge to my right hon. Friend the Member for Carshalton and Wallington and me, I am not persuaded that the new clause is the right way to deal with the problem, although I understand absolutely that we must do something. I would be interested to hear what the Minister says. I am aware of previous debates on the issue in consideration of the draft Bill, but I certainly do not think the right solution is to make companies go through a separate doorway and an entirely different process that does not apply to individuals. I am keeping an open mind about that.

Denis MacShane (Labour, Rotherham)

Is it not a fact that, as we speak, across the range of civil laws and torts, companies may be in front of judges, asking for urgent applications, injunctions or hearings? In the hypothetical case of a company that was about to be taken over when something grossly defamatory was said, clearly the company would go to a judge, who would instantly acquiesce to the necessary action being taken. The new clause does not prevent that, but it says to Tesco, Superdrug, TK Maxx and Mrs Lambert that they should not seek to silence genuine concerns about what they are up to by using defamation threats and Schillings.

Simon Hughes (Liberal Democrat, Bermondsey and Old Southwark)

I understand the right hon. Gentleman’s argument. I am a lawyer, and I know the process of judicial review: one first goes before a judge to get off first base; the judge decides whether there is a case; and then one goes on to make the substantive case later. That is available to anybody who applies for judicial review. It is not discriminatory or available only for a corporate applicant or local authority, as opposed to an individual. I am not saying that there cannot be a process, and I am not resisting the argument that something is needed to ensure that intimidatory libel actions are not taken. I am just expressing an open view about how we get to the result we want to achieve, understanding the point of principle made by my hon. Friend the Member for Ipswich, which is that suddenly to create a divide that says “corporate applicants this way” and “individual applicants that way”, with the first group having to play a preliminary or first round and the second having a bye to the second round, may not be the right way to do it.

I will listen to the Minister. We have a concern, and if there is an opportunity of addressing it in the Bill, that would be a good thing, particularly in relation to this issue, as people are still being intimidated by companies and their lawyers. We need to try to solve a problem that, to my knowledge, is producing great distress and considerable concern up and down this country, if not the UK.

Paul Farrelly (Labour, Newcastle-under-Lyme)

I, too, want to speak to new clause 4 and its kid brother—or shorter sister—new clause 7. I am really glad that we have had this extensive debate—and I am glad to extend it. The Bill is silent on corporations, and I welcome the fire and brimstone contribution by the hon. Member for Ipswich, and what I would call the very responsible use of privilege by my right hon. Friend the Member for Rotherham and the right hon. Member for Bermondsey and Old Southwark. It is entirely responsible to highlight in this debate the aggressive activities of lawyers such as Schillings, how they use the libel laws to chill, very often on behalf of behalf of corporations in so-called reputation management, and how they deploy those weapons against organisations such as Citizens Advice.

The Select Committee on Culture, Media and Sport considered corporation defamation, including many of the issues in new clauses 4 and 7, in our report, “Press standards, privacy and libel”, in February 2010. In that report and its recommendations, we had regard to existing limitations regarding bodies—rather than actual people of flesh and blood—who in law can, or cannot, sue for defamation. The seminal case was Derbyshire v. Times Newspapers in 1993. We also considered the seminal case in the United States, where there are fundamental protections. The result of New York Times Company v. Sullivan in 1964 was that McLibel would have been highly unlikely in the United States.

One of the significances for the hon. Member for Spelthorne about the McLibel case was that it reaffirmed the rights of corporations to sue in this country. That right has more recently been reaffirmed in the seminal case of Jameel v.Wall Street Journal Europe. In both those cases—and unlike in the Derbyshire case, where restrictions are put on local authorities, trade unions and other unincorporated bodies—the courts have said that with regard to corporations, rather than taking the decisions themselves, they look to Parliament to make that change. That is why it is important for us to consider the issue in the Bill.

We also considered another very unequal case, in terms of the financial resources that the parties could deploy: the case of Tesco Stores Ltd v. Guardian News and Media Ltd in 2008. I want to come to that later. We also considered representations from people with the opposite view, the hon. Member for Ipswich will be glad to hear. There were representations to the effect that companies also had a reputation to maintain. In our recommendations, we commended the Government’s measures to cut costs, speed up libel cases and strengthen the defence of responsible journalism, which we hope will reduce the inequality of arms.

We also recommended that the Government perhaps look at a new tort of corporate defamation where proof of actual damage was required before an action was brought. Again, that is relevant to new clause 7, as is our recommendation that the Government look at the possibility that corporations can sue only where they can show malice or recklessness. We also asked the Government to consider reversing the burden of proof as part of the new tort of corporate defamation, to look at developments in Australia, and to consult widely, which they did.

The issue was explicitly addressed by Lord Lester in clause 11 of his private Member’s Bill, which set down the test that appears in the new clauses and which requires companies to show likely and substantial financial loss. The issue was considered by the Joint Committee on the draft Defamation Bill in response to the Government’s consultation on the subject, and it recommended looking at Australia. It cited the difficulty of complying with the European convention on human rights—an issue that the Australians do not have to grapple with—and recommended that companies should not lose altogether the right to sue, while recognising the issue of inequality of arms. However, it explicitly favoured the Lester approach, which is embodied in the new clauses, of “substantial financial loss”. The benefit of new clause 4 is that it includes the clarification of the phrase, “substantial financial loss”, that was recommended by the Joint Committee.

The Joint Committee recommended a further hurdle, which again finds a place in new clause 4, that corporates should first have to obtain the permission of the court. That addresses a serious problem in libel law connected court procedures and costs. In libel, all someone needs is a lawyer, usually, and a rubber stamp in order to issue a writ. Defending a writ, however frivolous or malicious, puts the defendant in the position of having to commit costs and time and file a defence. Without a defence, a court can find against the claimant. That is all part of the intimidatory and chilling effect of the existing system.

There was a further recommendation from the Joint Committee, which was ably chaired by Lord Mawhinney, that its proposals cover trade associations that represent for-profit organisations. The case of Simon Singh, and the quirks that enabled the British Chiropractic Association to bring a case because it was incorporated, are echoed by the comments of my right hon. Friend the Member for Rotherham on the Chartered Institute of Journalists, which could bring a case against him because it, too, by a quirk of organisation, was an incorporated body. New clause 4 very helpfully clarifies the position to remove any uncertainties or ambiguities in the law, and deals with which bodies may or may not sue. New clauses 4 and 7 do not seek to prevent corporations suing, but seek to present reasonable hurdles for them to surmount and reasonable tests that they have to pass.

Turning to the Government’s response to the Joint Committee’s recommendation, the Government considered that all the concerns about corporates were satisfied by clause 1, which deals with serious harm. On page 26 of their response, they said that

“in order to satisfy the serious harm test in Clause 1 a corporation would in practice be likely to have to demonstrate actual or likely financial loss”.

The phrase “would…be likely” suggests that there is no certainty about that. Indeed, if there were certainty, everyone who has been raising concerns about corporates throughout discussions on the Bill would have been told that their concerns were entirely misplaced and that they were effectively wasting their time. The explanatory notes are entirely silent on corporations or on any definition of serious harm in relation to them. After all the consultations, the Bill is silent on corporations, full stop. The Government also rejected the additional permission stage by the court that was recommended by the Joint Committee, favouring instead a reliance on early resolution procedures. Again, we do not have the details of the early resolution procedures that the Government plan to pursue.

I want to consider two cases. In the first, the procedures failed and in the second, the courts acted speedily but other measures to speed up the resolution, including those in the Defamation Act 1996, did not bite early enough to stop costs escalating enormously, and inequality of arms had its day.

The first case is of Dr Peter Wilmshurst, who was sued by NMT Medical of Boston, Massachusetts. I do not want to repeat what has been said about that case, and I hope that other provisions in the Bill would help to prevent such a case arising in future. It is easy to conjure circumstances, however, in which reasonable people, such as medics, scientists and professionals, make comments very responsibly over the reliability of trials, the effectiveness of devices and other issues of public interest, but can be sued. There are other cases involving Dr Ben Goldacre, a responsible journalist and medic, who has written a science column in The Guardian.

The more widely applicable feature of the Wilmshurst case is that it went on for four years, until NMT Medical collapsed. The consultant paediatrician was sued in 2007, and the case was allowed to continue until December 2010, until a High Court master said that it would be struck out finally if the complainant did not lodge £200,000 as surety for costs. The company did not do that, of course, and used delays all the way through. Those delays and the prospect of further costs and aggravation were an attempt to silence not only Dr Wilmshurst but other critics. In March 2011, after the Court master’s decision, it issued a fourth writ against Dr Wilmshurst. The whole thing only stopped when the company went bust.

Even in that case, an administrator would be entitled to bring a case; dead people cannot sue, but it is foreseeable that dead companies might. The case is an example of procedures being spun out and costs being increased in an effort to stress the defendant, to chill him and others, and to take them out of the game, with no reasonable hurdles to pass.

Time permitting, we may come on to an additional feature of the case in this debate, but if not, we will certainly do so on Third Reading. Dr Wilmshurst was defended with a conditional fee arrangement, but the likelihood of him being able to do so in today’s circumstances is much diminished because the protections of CFAs are gone. Because NMT Medical went bust, the lawyers defending Dr Wilmshurst with a CFA could not recoup their costs. Dead companies cannot pay.

The second case—Tesco Stores Ltd v. Guardian News and Media Ltd. and Alan Rusbridger—involved the courts acting speedily. It started in April 2008, when Tesco, the biggest supermarket group in the UK and one of the biggest retail groups in the world, issued no fewer than four writs against The Guardian. Two were for libel and two were for malicious falsehood, the latter against both the newspaper and the editor.

The case was about an article on Tesco’s tax affairs written by two award-winning journalists. I will declare that one of them, Ian Griffiths, is a very good friend, with whom I worked at The Independent on Sunday. Ian is a former business journalist of the year and a qualified accountant, and he wrote the seminal book, “Creative Accounting” in 1986. It was an account of how companies could flatter their profits and balance sheets.

Denis MacShane (Labour, Rotherham)

Not about journalists’ expenses.

Paul Farrelly (Labour, Newcastle-under-Lyme)

Not about journalists’ or anyone else’s expenses. That was published years before a better known book by Terry Smith from 1992, called “Accounting for Growth”. I mention Mr Smith and the background of those publications for a very good reason—before you interrupt me, Mr Chairman.

Terry Smith, a colourful City figure, plays more than a cameo role in the debate, because between 2003 and 2006 he sued the Financial Times for £230.5 million in damages. It would have been a record for libel. The case was about articles from 2003, and was brought in the name of his company, the stockbroker Collins Stewart, because the share price had allegedly plunged. As to the circumstances raised by the hon. Member for Ipswich, I can tell him that the court struck out the claim for damages based on the fall in the share price. That issue is referred to in the new clauses.

To return to the Tesco case, having looked at the circumstances, I cannot see that there was any prospect that Tesco would be able to prove malicious falsehood against journalists and an editor of such distinction.

Helen Goodman (Labour, Bishop Auckland)

I remember that there was a dispute between Tesco and The Guardian but will my hon. Friend remind us what it was about?

Paul Farrelly (Labour, Newcastle-under-Lyme)

I am just about to come to that, after this short preamble.

Tesco brought the case for malicious falsehood simply because it could. In doing so it alleged that as well as libelling the company the journalists and editor deliberately printed a story they knew to be untrue. The article was about a complex series of property deals, via jurisdictions such as the Cayman islands and Jersey, whereby Tesco allegedly sought to save more than £1 billion in tax. Tax avoidance is as hot a topic today as it was then.

The principle mistake made by The Guardian, which it afterwards admitted, was that it identified the wrong tax. It alleged that the saving was of corporation tax, whereas in fact it was of a more obscure but still important property tax called stamp duty land tax. At the time, in solidarity, Private Eye launched its own investigation and found that Tesco was using elaborate schemes, legally, to avoid corporation tax too. Tesco, as has been tried before under our libel laws, sought the exclusion of that evidence from Private Eye in court, but in that case the judge refused. Although we were critical of him in our report, in that case Mr Justice Eady was the hero of the hour.

Essentially, therefore, the thrust of the story was true. Tesco had entered into complex arrangements of avoid paying large amounts of tax—more than £1 billion—to the Exchequer. The Guardian issued two corrections of its mistakes. I remember an extensive double-page spread of admissions and clarifications. Never, as far as I can see, has a newspaper apologised or clarified so much, no doubt under the incentive of Tesco’s firepower. It issued two apologies.

In defence of the reporters, I would say that the trail was very complex, even for an experienced accountant, and Tesco did not exactly help The Guardian to follow it; but mistakes were made and apologies were given. There was certainly no malice involved, but Tesco pressed on regardless, aided and abetted by perhaps the country’s most aggressive libel lawyers, alongside Schillings, Messrs Carter-Ruck.

In mid-May 2008, some weeks in, The Guardian made another attempt to settle the case, making use of the offer of amends procedures introduced in the Defamation Act 1996. That was a previous attempt by Parliament to provide a means to settle cases swiftly and therefore cheaply. Tesco and Carter-Ruck, however, were having none of it. In offers of amends, the procedure works only if an offer is either accepted or rejected. They neither accepted nor rejected the offer, preferring to ponder it while they pressed on and racked up even more costs.

I will give an example of such costs, because they are central to how corporations can and have used the law in ways that new clauses 4 and 7 seek to correct. The costs are in dollars, because I have taken them from a good description of the case by the editor of The Guardian, Alun Rusbridger, which was published in The New York Review of Books. I commend the article to the Minister; it is clearly not unbiased, but it is a factual account of what happened.

Roughly by the stage of the offer of amends, some seven weeks in, The Guardian had racked up $500,000 of costs. By week nine, Carter-Ruck had presented a bill for more than $800,000, plus other costs. Let me give some examples of how ridiculous the situation became. As part of those costs, the accountants Ernst and Young wanted $173,000 for advising Tesco’s lawyers, Carter-Ruck, about Tesco’s own accounts, and the specialist tax lawyers Berwin Leighton Paisner billed Tesco for $361,000 for explaining Tesco’s own tax structures to its board and libel lawyers.

Had the case gone the full distance, The Guardian might have been liable for all those costs, and for more costs had it lost. In total, if the case had gone beyond the High Court to the Court of Appeal and the House of Lords, the estimated bill for the whole case would have been £5 million, even though the newspaper apologised, clarified the matter and sought to take advantage of the measures brought in by this House in the form of the 1996 Act. Had Tesco lost, £5 million would clearly have been neither here nor there for such a huge multinational corporation; for The Guardian or any smaller newspaper, it would have had a substantial impact.

That is another case in which damages would have been insignificant. The courts acted speedily—the much-criticised Mr Justice Eady was the hero of the hour in trying to speed up the case—but the early resolution procedures did not work and did not keep down costs. In September 2008, The Guardian agreed to settle and to issue a correction and an apology that had been agreed with Tesco. However, because of confidentiality, we do not know how that apology differed from earlier ones or what sum was paid by The Guardian to a charity of Tesco’s choice in order to settle the case. There would also have been arguments about costs, but I do not know how they were resolved.

The likes of The Guardian can take on such cases, but it did not want to go all the way in that case because of the size of the bill it might have faced. Not every defendant is The Guardian, The New York Times, The Wall Street Journal, or Times Newspapers Ltd—backed by News Corporation—which took the Flood case to the House of Lords. The point that new clauses 4 and 7 seek to address is that huge multinationals, by pursuing such actions, achieve their aims even if they lose, because they demonstrate the huge costs, time and effort that are involved. Such a chilling effect spreads from local newspapers to the rest of the media, publishing and non-governmental organisations, as we have seen in the example of citizens advice bureaux.

The Committee will be glad to hear that I am nearing my conclusion. New clause 4, like the alternative new clause 7, seeks to address such problems. It is not by any means a panacea. The proposed reforms of court procedures are vital, as is the Bill as a whole, and they are important in ensuring that existing procedures, such as offers of amends, actually work.

Ben Gummer (Conservative, Ipswich)

I feel that one of the correspondents of “Private Eye” has revealed himself in this speech. I feel almost as if I had read next week’s copy without having to pay for it. This has been a brilliant exposition of a series of cases. It is true that it demonstrates the need for reform of procedure.

To return to new clause 4, will the hon. Gentleman answer something before he supports it, if he does? For some companies, such as Coca-Cola, a large part of their balance sheet rests on brand value. The size of the loss as a result of reputational damage can be quantified only at the point of crystallisation when the company is sold, so it is unlikely to be seen. Significant loss of reputation could occur while sales remain the same. Such companies would fall foul of this clause; there would be considerable damage and harm to the company, but it would not be seen in the underlying sales figures. How would they find remedy for the damage to their reputation and to their ability to employ people and grow prosperity?

Paul Farrelly (Labour, Newcastle-under-Lyme)

I am pleased to answer the hypothetical case put by the hon. Gentleman. I have advised on the corporate financing on takeovers, and I do not think that any corporate financier or corporate finance lawyer worth his salt would advise a company to proceed with a sale at that particular point.

The serious point that the hon. Gentleman makes is whether share prices, which go up and down, can be used to establish real loss of reputation. I am afraid that real loss of reputation is demonstrated by an effect on the underlying business. If there is no such effect, in the medium and long run—or the very short run—share prices recover. Nestlé suffered grave damage to reputation in the milk powder situation. Where companies genuinely suffer, it can be seen in their profit and loss and sales. That is where the case must be made.

To conclude, what we had in the case of Tesco was a determined, deep-pocketed litigant for whom money was no obstacle, with aggressive lawyers who had an incentive to spin out the case, racking up costs and thus their own remuneration. There was no interest in settling. Many of the procedures assume that parties wish to settle, but the difficulty is when there is inequality of arms and a corporation’s intention is to teach the other person a lesson. That is apparent in the Wilmshurst case and others, where the intention was to chill reporting. In the Tesco case, strangely enough, no one picked up the parallel Private Eye investigation, no doubt because they were fearful of being sued as The Guardian was being sued. The intention was to take reporters and organisations out of the game.

The real test of the Bill, including how it addresses corporations, is how cases such as those cited would have been affected. Would the Bill have made a difference? It fails because, despite all the consultations, Lord Lester’s Bill and the Joint Committee’s recommendations, the Bill is still entirely silent on corporations. I urge the Government to table amendments and clarifications on Third Reading regarding how the law of defamation should apply to corporations.

Jonathan Djanogly (Conservative, Huntingdon)

Hon. Members have debated the new clauses at some length, so I shall do my best not only to explain the Government’s position but to provide some background for how we got there. The clauses relate to the ability of corporations and other non-natural persons to bring an action for defamation.

New clause 4 focuses on corporations and would have the effect of restricting a corporation’s right to bring an action. It seeks to do so in two ways. First, it would require a corporation to obtain the court’s permission before bringing a claim. It specifies a number of particular matters that the court might wish to consider in reaching that decision. Secondly, it would require a corporation to demonstrate that the statement being complained of has caused it, or is likely to cause it, substantial financial harm. It sets out a number of matters that the court must consider when determining that.

The Government recognise the concerns of the Joint Committee and others in the area, and we are aware of the arguments that have been made in favour of restricting corporations’ right to sue for defamation. However, we believe that there is a difficult balance to be struck. Clearly, businesses are sometimes powerful, and it may be undesirable for them to be able to bring, or threaten to bring, claims simply in order to stifle debate. Equally however, as my hon. Friend the Member for Ipswich indicated, the vast majority of businesses are small and not cash-rich. Many have genuine reputations to protect, and they can be subject to unfounded or spiteful allegations, harming not just the management, but shareholders and employees. While corporations are therefore not mentioned in the Bill, we think the correct approach is generally to raise the bar to trivial claims, and the Bill’s new test of serious harm, with clearer defences, will apply equally to companies.

Corporations are already unable to claim for certain types of harm, such as injury to feelings. In order to satisfy the serious harm test, a corporation would in practice be likely to have to demonstrate actual or likely financial loss in any event. Given the potential effect on shareholders and management, we see no reason why there should be no redress for a defamatory action that has caused a fall in share price.

I listened to the significant description of the impact of cost from the hon. Member for Newcastle-under-Lyme, but I do not necessarily see that to be an argument against corporations. However, as my hon. Friend the Member for Ipswich pointed out, it goes to procedural reform. In addition, the serious harm test and other measures, such as the new procedure for determining key preliminary issues, should help to reduce the cost and length of proceedings, and therefore reduce the likelihood of attempts being made by corporate or wealthy individual claimants to intimidate defendants with limited resources.

We do not consider the introduction of a permission stage for corporations to be appropriate. As part of the new preliminary procedure, the court will be able to deal with the key issues in dispute at the outset and make detailed provisions in relation to cost control and the future management of the case in light of issues that remain to be resolved. A permission stage for corporate claims in addition to that new procedure would almost certainly add to the cost involved.

New clause 7 would restrict the circumstances in which non-natural persons may bring a defamation action. They would be permitted to do so only if they can show either that the publication was published with malice or that they had suffered actual or likely financial harm. Hon. Members have to appreciate that the new clause would go beyond just restricting the ability of trading corporations to bring a claim, and would affect the rights of all non-natural persons. That would include a wide range of bodies, including charities, non-governmental organisations and companies operating on a not-for-profit basis.

The intention of the new clause may be to reflect the Libel Reform Campaign’s call for restrictions to be focused on non-natural persons who perform a public function. The hon. Member for Stoke-on-Trent South mentioned Derbyshire County Council v. Times Newspapers Ltd, on which we had a significant discussion. We sought views in our consultation on the suggestion that the principle from the case should be put in statute and extended to a wider range of bodies that exercise public functions. A clear majority of responses considered that to be inappropriate and took the view that that would represent a significant restriction on the right of a wide range of organisations to defend their reputation.

Paul Farrelly (Labour, Newcastle-under-Lyme)

When the Minister repeats the Government’s response to the Joint Committee, that corporations will be likely to have to show substantial financial loss under clause 1 and the serious harm test, will he consider how he could bring more certainty to that as the Bill goes through, so that he does not have to use the word “likely”?

Jonathan Djanogly (Conservative, Huntingdon)

The position is based on case law and it would be for the courts to decide, depending on circumstances. We share the concerns shown throughout the consultation. We believe that it is much better for the courts to develop the Derbyshire principle as they consider appropriate in the light of individual cases.

The hon. Member for Stoke-on-Trent South took the point further, asking why the Derbyshire principle should not be extended to corporations. We believe the same arguments apply. The Derbyshire case considered the position of local authorities alongside that of corporations. Lord Keith identified that the most important feature distinguishing a local authority from a corporation was the fact that it was a governmental body. He clearly stated,

“It is of the highest public importance that a democratically elected governmental body, or indeed any governmental body, should be open to uninhibited public criticism.”

In the case of McDonald’s Corporation v. Steel and Morris, the courts again recognised that corporations were

“constitutionally in a quite different position”.

We agree with that position.

The hon. Gentleman also expressed his desire that private corporations exercising public functions should not be able to sue. The current law in the area is capable of being developed by the courts. The courts have in fact already shown themselves alive to the flexibility of the law in using the rule to prevent the British Coal Corporation from suing in defamation. That is not a direct analogy but we believe that it is preferable for the courts to be able to develop the law in this area as they consider appropriate in the light of all the circumstances of individual cases.

Paul Farrelly (Labour, Newcastle-under-Lyme)

I hope the Minister appreciates that we are now in a position where the courts have said it is for Parliament to change the law and the Minister is effectively saying it is for the courts to change the law.

Jonathan Djanogly (Conservative, Huntingdon)

The courts will interpret the law and, in the case of the Derbyshire principle, develop existing case law.

I have just been speaking about corporations exercising public functions under contract. That is a much narrower question than whether corporations more widely should fail in defamation action under an extension of the Derbyshire principle. I will, however, look more closely at the particular observation of the court case to which the hon. Gentleman refers. I remain of the view that it is not appropriate to single out companies in the way proposed.

The Government believe that the Bill takes the right approach and that the serious harm test and other measures, such as the new procedure for determining key preliminary issues, should help to reduce the cost and length of proceedings.

Simon Hughes (Liberal Democrat, Bermondsey and Old Southwark)

I am grateful to the Minister for the clear statement on where the Government are in general. I hope he may come specifically to issues raised about how to deal with abuse by Retail Loss Prevention, comparable companies or their solicitors, and their big position against small players.

Jonathan Djanogly (Conservative, Huntingdon)

I think I have addressed that in my remarks. The Government’s position is that we do not think that corporations should be included in the Bill.

The Government believe that the Bill takes the right approach, and the serious harm test and other measures, such as the new procedure for determining key preliminary issues, should help to reduce the cost and length of proceedings. That in turn should reduce the ability of corporate claimants and other non-natural persons to intimidate defendants with limited resources. On that basis, I hope that the hon. Member for Stoke-on-Trent South will withdraw new clauses 4 and 7.

The rest of the debate is in Hansard.