Carter-Ruck says United States, rather than London, is now the ‘real home’ of libel

Last year, Forbes magazine crowned London “the most influential city in the world”. But in one respect London is waning: the claim that it is the libel capital of the world can no longer be justified. What’s more, the real home of libel is perhaps a surprising one.

So, what has contributed to London losing its crown? The so-called “chilling effect”, felt by editors when they feel the icy blast of an incipient libel action, has been warmed up by a number of developments.

Gone from the UK is the claimant-friendly jury, so generous with the chequebook of others when awarding damages. Back in 1988, when a newspaper actually won an action, a victorious Observer reporter noted that it was the first time a libel defendant had won at trial in more than 40 cases. In the time between the verdict and the publication of the book about this rare event, a further ten cases went successively against the media and other libel defendants.

The high-water mark of libel damages in the UK was 1989, when Lord Aldington was awarded £1.5m. This was two years after Jeffrey Archer temporarily bagged £500,000, and five years before Walker Wingsail were awarded £1.485m.

How times have changed. Between 1997 and 2009 the average award was just short of £48,000, and between 2004 and 2008 it had fallen to just under £38,000. Correspondingly, whereas 298 claims for libel were issued in the UK in 2009, the figure shrank to 142 in 2013, rising to 227 in 2014 before the effects of the Defamation Act kicked in.

Most libel lawyers agree that with the advent of the defendant-friendly Defamation Act in 2014, the number of claims in the UK will continue to fall. Now a claimant has to establish that an imputation has caused or is likely to cause “serious harm” to his reputation. This is a significant hurdle. If the claimant is a company, it has an even higher threshold, in having to establish actual or likely “serious financial loss”.

Last year saw not a single libel trial with a jury, and only one full trial by judge alone, with the claimant being awarded £45,000 [Garcia v Associated Newspapers]. While one case [ReachLocal UK Ltd and another v Jamie Bennett and others] had damages assessed by the court in 2014 at more than £400,000, this was largely the result of a successful claim for actual loss.

Of course, costs add to the expense that a publisher has to pay, but Lord Justice Jackson, in his review of civil costs, reported that the average settlement made by the media, inclusive of costs, amounted to only £25,000.

Although Australia and Canada are strong contenders for the crown, there is (and perhaps always has been) only one true contender for the libel top spot: the United States of America. Yes, the land of the First Amendment to the Constitution – which guarantees free speech.

Across the pond, a 34-year study has found the average trial award to be $2.84m, with almost $400m being awarded in 2009, up from $240m in 2008. This year, Donald Trump has commenced a $500m lawsuit which easily eclipses the general ceiling for general damages for libel in the UK of about £275,000.

And in case it is thought that jury verdicts are routinely set aside in the States, think again. According to the same study, claimants win almost 60 per cent of cases at trial and 45 per cent on appeal, prompting media defendants such as Philadelphia Newspapers to settle a defamation claim for an estimated $20m and the Alton Telegraph settling a claim for $1,400,000 following an award of $9.2m.

Surely it is these vast sums, routinely awarded in the US, which have the real “chilling effect” on free speech, contributing to the uniformly dull transatlantic media coverage as against the vibrancy, intrusiveness and downright cheekiness of the British tabloids. It would be interesting to hear whether editors of UK media would trade our laws as they are now for the US model.

Nigel Tait is a managing-partner at Carter-Ruck

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