Feb. 22 (Bloomberg) -- A Saudi Arabian sheikh and a Ukrainian businessman may be among the last of the so-called libel tourists in the U.K.
The government may rewrite defamation laws that currently allow a non-citizen to sue a foreign media outlet for reputational damage claims in the U.K. That would close the door for people who’ve sometimes used London courts to silence critics. U.S. film director Roman Polanski, former California Governor Arnold Schwarzenegger and Russian billionaire Boris Berezovsky have won suits filed under the statute.
Labeling the law a “laughing stock,” Deputy Prime Minister Nick Clegg vowed to publish a draft bill this spring, targeting libel tourism and the high costs of bringing suit. The law, whose critics say it’s only accessible to the rich, dates back to Victorian times and is plaintiff-friendly, placing the burden of proof on the defendant, contrary to laws in the U.S. and most of continental Europe.
“Britain’s libel law is not only archaic and outdated but incredibly expensive,” said Mike Harris, public affairs consultant at Libel Reform, citing hourly legal fees of 400 pounds ($650). “The law is used by rich people who will pay whatever they can to defend their reputations.”
Ukrainian billionaire Dimitry Firtash is suing the Kyiv Post, a Kiev, Ukraine-based newspaper, over a story on his gas company, RosUkrEergo AG, which he says suggests corruption. Saudi sheikh Mohammed Hussein Ali Al Amoudi is suing over a story in the U.S.-based Ethiopian Review website that he says alleges family improprieties. The jurisdiction hearing in the Firtash case is slated for Feb. 24.
Advocates of the current law say the debate is overblown, pointing out that few libel cases make it to trial.
“Unlike in the U.S., we balance the right to reputation with freedom of speech,” said Nigel Tait, a partner at prominent British libel law firm Carter-Ruck, who has represented Elton John and Simon Cowell. “Our laws and procedures are fair all around.”
The changes will only drive fees up with claimants having to prove more and lawyers racking up more hours, he said.
“We have a reputation for fairness and honesty,” he said, adding that individuals from former Soviet Union countries and the Middle East often choose London to file claims because courts are more neutral.
The Firtash suit says the Kyiv Post article alleges “massive criminal corruption” that could threaten the “fiscal stability” of Ukraine and “the energy security of Europe.” His lawyer, Simon Smith, declined to comment on the matter.
According to Kyiv Post editor Brian Bonner, Firtash said his reputation was damaged even though barely anyone in the U.K. read the article. The newspaper has since blocked U.K. access to its website, fearing similar claims. Bonner said the newspaper is ready to settle the case.
“We’re a Ukrainian newspaper and he’s a Ukrainian businessman and 30 people downloaded this in the U.K.,” Bonner said. “If we lose, estimates are this could cost $1.5 million in fees, which is a huge price for an independent paper sold two years ago for $1.1 million.”
Saudi sheikh Al Amoudi, who owns several properties in the U.K., said a story in the U.S.-based Ethiopian Review website has subjected him to “serious libel centered around one of his young, unmarried daughters.”
“The Al Amoudi case is definitely libel tourism because Sheikh Al Amoudi lives for the most part outside the U.K. and is not a British citizen and the majority of readers of the Ethiopian Review are outside the U.K.,” Libel Reform’s Harris said. He said the draft bill is expected in late March.
The sheik, through a spokesman, disagreed with any characterization of his claim as libel tourism and said that “the libels have been published via an international website with a considerable readership in the U.K.”
He also added that “the publisher of these allegations has for a long time been critical of the sheikh.”
Al Amoudi’s lawyer, Ruth Hoy, couldn’t be reached for comment on the case. The statement said the suit was brought in the U.K. “because of the considerable connections that the sheikh and his family have to the U.K., where significant publication and damage has occurred.”
President Barack Obama last year signed a bill protecting U.S. writers from foreign libel judgments. The Speech Act prevents foreign libel judgments not in line with the U.S. Constitution from being enforced.
The issue came to the fore after American author Rachel Ehrenfeld was sued in London by Saudi billionaire Khalid bin Mahfouz for alleging his links to funding terrorism, even though only 23 copies of the book were sold in the U.K.
“People can bring cases here that they simply shouldn’t be able to; the threshold is so low,” said David Hooper, a lawyer at law firm Reynolds Porter Chamberlain. “We need to get to grips with the Internet age.”
The Web has made publications and articles borderless, rendering current U.K. laws obsolete, some lawyers say.
“We have outdated Victorian libel laws and the assumption that everyone tells the truth is ridiculous,” said Mark Stephens, a media lawyer who worked on the Ehrenfeld case and is defending the Kyiv Post and Ethiopian Review. Stephens represents several media organizations in the U.K., including Bloomberg News.
The laws have been used in a wide range of cases.
Polanski won his case against Vanity Fair, claiming he was libeled in a 2002 article that said he made sexual advances toward a young model as he was traveling to the funeral of his wife, Sharon Tate. He got 50,000 pounds in damages.
Human Rights Watch in 2005 was threatened with a libel suit in London by a Rwandan genocide suspect mentioned in one of the group’s reports. The group eventually clarified its report.
Plaintiffs have been so successful in these cases that lawyers operate on conditional fee agreements, meaning they only get paid if they win. Changing libel laws might make such cases more expensive, said Steven Heffer, head of media at Collyer Bristow Solicitors in London.
“The burden should remain where it is; why should it be for you to prove that you’re not something,” he said. “If a journalist makes an allegation they have to back it up.”
Leave Burden Alone
One Heffer case involved Julia Svetlichnaja, who the Sunday Times alleged was a Kremlin agent after she interviewed Russian Alexander Litvinenko shortly before he died from polonium-210 poisoning. Svetlichnaja wouldn’t have been able to bring about a suit had she been forced to pay lawyers’ fees in advance, Heffer said. She won the case.
Hooper at Reynolds Porter argues that high costs have been driven up by the fact plaintiffs typically win their cases. In contested cases damages may amount to 15,000 pounds, but lawyers cost 50,000 pounds, he said.
“It’s traditionally been a preserve of the rich,” he said. “No one’s been controlling it, but I think it’s going to change.”
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