Defamation of a company

The official text of the controversial Defamation Act 2009 has finally been made available. Most of the controversy was whipped up by the blasphemy sideshow, while other reforms received less attention.

There was little focus, for example, on section 12 of the Act, which is far more likely to be of general interest than the blasphemy provisions:

The provisions of this Act apply to a body corporate as they apply to a natural person, and a body corporate may bring a defamation action under this Act in respect of a statement concerning it that it claims is defamatory whether or not it has incurred or is likely to incur financial loss as a result of the publication of that statement.

The Irish Human Rights Commission argued that the ability of a company to sue for defamation should be more restricted than that of a private individual:

While it is clear that a body corporate has the right to sue for defamation, the same issues of the right to a good name and reputation do not apply as would be the case for an individual action. In this regard, the case may be made that restrictions on freedom of expression operating in favour of a body corporate should be more narrowly drawn than those protecting the reputation and privacy rights of individuals.

Those critical of the Seanad should note that this debate was aired in that house. Senator David Norris was more forceful (Seanad Debates, 20 February 2007):

If there is no financial hurt, one is left only with feelings. I contend, however, that corporate entities are not entitled to feelings. The ability to feel is a human attribute that does not attach to the collective in the same way.

I again plead the interest of the ordinary person in this. If I were to say that Guinness or Mars bars are bad for us, should the corporate entities that manufacture those products be allowed to land on me? … We should not be expected, however, to compensate a corporate identity for an injury to its supposed corporate feelings.

Indeed, then-Minister for Justice Michael McDowell appeared to take on board these concerns.

The good name of every citizen requires to be upheld by the Constitution but companies are not citizens. I will reconsider the matter between now and Report Stage. It may be better to recast the section to state that a body corporate can only bring a defamation action in respect of a statement made where it has incurred, or is likely to incur, financial loss or where the statement was made with malice.

Some senators came to the defence of the section. Various reasons were offered in support of it, including the need to protect jobs and to protect against industrial espionage (although the example given by Senator Walsh appears to be plain, old-fashioned defamation or injurious falsehood, rather than the more exciting category of industrial espionage). However, the provision survived in the Act.

While the ability of companies to sue for defamation was regarded as already established in the common law, the explicit provision that financial loss need not be established appears to heighten the risk of McLibel type actions in Ireland.

It is disappointing that an alternative form of action was not introduced for corporate bodies in Ireland, as suggested by the IHRC,  not least as large companies have far greater resources than most individuals to launch defamation actions and introduce chilling effects to comment on their affairs. Consumer affairs correspondents, such as the Irish Times’ Pricewatch or even consumers groups could find themselves targeted.

Of course, perhaps they already are and perhaps fears of a chilling effect have already been realised. It is anecdotally known that restaurant proprietors are particularly sensitive to adverse comment and often resort to the threatening solicitor’s letter. The tactic is believed to successfully keep certain restaurants out of the papers (or, at least, out of the review sections).

To take a current example, Maclaren may come to feel aggrieved at coverage of pramgate. The necessity for a product recall in the EU, as has been carried out in the US, remains unclear at present but it is conceivable that a journalist could write something about the company that it finds actionable. That journalist may, in the event, have a valid defence. But will the case be fought, or will the newspaper decide it is not worth risking a test case under the new Act?

Of course, such an action could result in negative PR for the company issuing the threats and that PR risk may act as a deterrent. As ever, we will have to wait and see what the real world throws up against our paper laws.

PS. Unsurprisingly, the Defamation Act 2009 continues the practice of this Government to provide for commencement of the legislation by Ministerial order, rather than by setting a commencement date. According to the website of the Department of Justice, commencement is now expected in November/December 2009, once the Rules of Court are updated to accommodate the Act.

4 thoughts on “Defamation of a company

  1. Interesting post Rossa. Dublin may supplant London as the world capital of defamation lawsuits. Imagine the poor hurt corporations seeking to restore their honour in the courts.

    Should generate a lot of litigation!

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