Have Companies Lost The Ability To Sue For Defamation?

Summary and implications

The Defamation Act 2013 (the Act) and the Defamation (Operators of Websites) Regulations, 2013 (the Regulations) came into force on 1 January 2014. Companies in particular will now face considerable challenges in attempting to bring a successful defamation claim. Other significant changes shift more power to defendants, attempting to move the jurisdiction of England and Wales away from its claimant friendly reputation and provide increased protection for website operators.

Key changes introduced by the Act :

Claimants must show "serious harm" to their reputation For companies and other profit making entities, this means demonstrating actual or likely "serious financial loss" New single publication rule New defences, including specific defences for website operators and statements in scientific and academic journals Increased protection for secondary publishers Clamp down on forum shopping Many of these changes will be welcomed, particularly by website operators, secondary publishers and other frequent defendants. However, companies may need to start exploring other avenues in an effort to preserve their reputations if defamed. Whilst companies are familiar with awards of only nominal damages in successful defamation claims, now, in the absence of demonstrable "serious financial harm", a statement that injures the reputation of a company may not be defamatory at all.

This article explains the key changes and what they might mean for parties involved in or considering launching defamation claims.

1. Serious harm and serious financial loss

   In order to bring a claim for defamation it is no longer enough to show, for example, that the statement published is one that lowers the claimant in the estimation of right-thinking members of society. The claimant must now show that the publication of the statement has caused or is likely to cause serious harm to its reputation. Where the claimant is a company (or other body that trades for profit) harm to its reputation is not "serious" unless it has caused or is likely to cause serious financial loss.

   It is not yet clear what level of harm will amount to "serious" harm, or what level of loss will constitute "serious financial loss". A company may face a significant challenge trying to prove to a court that first, it has suffered or is likely to suffer serious financial loss, and second, that it was the defamatory statement that caused such loss and not some other factor.

2. Single...