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Libel judgments rendered abroad against U.S. media companies remain 'repugnant' to American laws, but won’t for long if a new…

Libel judgments rendered abroad against U.S. media companies remain ‘repugnant’ to American laws, but won’t for long if a new proposal takes hold

From the Winter 2004 issue of The News Media & The Law, page 12.

By Kirsten Murphy

Months after the terrorists attacks of Sept. 11, 2001, U.S. officials asked the Saudi Arabian Monetary Authority to monitor the bank accounts of some of its country’s most prominent business leaders, The Wall Street Journal reported in February 2002. Among those under suspicion of funding the terrorist organization al-Qaida and its Saudi-born leader, Osama bin Laden, were Mohammed Jameel, whose family owns the world’s largest Toyota franchise, and the Al Rajhi Banking and Investment Corporation.

Jameel and the companies quickly filed libel claims against the Journal. But rather than coming to the U.S. to have their cases heard, each suit was brought . . . in Britain.

“Say what you like about Osama bin Laden,” a British trial lawyer told Newsweek recently. “He’s done wonders for the defamation bar.”

The phenomenon, known as “libel tourism,” is not a new one — Russian politicians and businessmen used London as their libel headquarters in the 1990s to bring suit against Forbes magazine. Luckily for the U.S. media, though, American courts have thus far refused to enforce any foreign libel judgments.

However, that last line of defense might be chipped away by an unlikely source: academics. A recent project spearheaded by law professors seeking to harmonize U.S. and international law threatens to sacrifice First Amendment principles in the name of uniformity.

The problem with attempts to create uniform international law in this area, according to Kurt Wimmer, a partner at Covington & Burling in Washington, D.C., and an expert on jurisdiction and enforcement of foreign libel judgments, is that “you cede ground to people who aren’t used to and frankly don’t like the First Amendment.”

In Britain, for example, defamation statutes are notoriously plaintiff-friendly. Rather than requiring a person to prove a statement was false, British libel law puts the burden on the defendant to show that the published information was true. Damages, though not as high as those awarded by U.S. juries, are frequently won.

Jameel and his company were victorious in their libel suits last December, with a High Court jury finding the article — which appeared in the Journal’s U.S. and European editions — to be defamatory. The judge in the case rejected the newspaper’s argument that it was entitled to a qualified privilege, under British law, to report on matters of public concern. Dow Jones, the paper’s parent company, which is based in New York, said it will appeal.

“It is inconceivable that Britain would wish to remain the libel capital of the world,” said Sandra Baron, executive director of the Media Law Resource Center, located in New York. And yet, Britain is “so receptive to litigation between non-UK plaintiffs and non-UK publications,” she said.

So far, the threat of foreign courts’ antipathy to First Amendment principles has been tempered by a lack of judicial enforcement in the U.S. Media companies with assets abroad may be subject to attachment — the seizure of property in the country where the judgment was rendered — but efforts to tap into their U.S. assets have been consistently denied.

Laying down the law?

Attempts to create uniform international law to deal with the issues of jurisdiction and the enforcement of libel judgments have stumbled in the past. In 2001, the U.S. sent delegates to a convention at The Hague, Netherlands, to help develop an international treaty on the enforcement of foreign judgments.

However, the proposed treaty became too controversial once it became clear that U.S. Internet companies would come under enormous legal fire, Wimmer said. The treaty is still going forward, but only in a narrow way that will not affect the news media, he said.

A domestic effort to create a more uniform approach to the enforcement of foreign libel judgments is likely to meet with more success. The American Law Institute, an organization of judges, lawyers and professors that publishes proposed model legislation and “restatements” of law to guide courts, is currently working on a project to help determine which foreign judgments should be enforced in American courts.

The project, “International Jurisdiction and Judgments,” will likely be presented to Congress as a proposed federal statute. In April 2003, the institute released a tentative draft that contained an exception to the enforcement of foreign judgments — when they are “repugnant to the public policy of the United States.”

However, the draft contains notes that question “whether the differences between American and English libel law — with respect to issues such as the standard of liability in actions brought by the press and differences over where the burden of proof lies — are so fundamental that they are repugnant to basic concepts of justice and decency in the United States. That issue remains subject to intense debate.”

The Media Law Resource Center’s Baron said those notes won’t likely survive the ALI revision process. “The [ALI] reporters have stated that there is controversy where there is no controversy in the U.S. courts,” she said. “There is no ‘intense debate’ or controversy about the Matusevitch line of cases.”

The Matusevitch case, decided in 1995, set the standard for adjudication of foreign libel suits. The court held that foreign judgments repugnant to the public policy of the enforcing state will not be enforced. Several other decisions across the country have followed the principles set forth by the Matusevitch court.

In fact, Baron added, “the only controversy is the ALI’s effort to overrule that line of cases. This is simply not the role of the ALI.”

Media attorney Thomas Leatherbury, a partner at Vinson & Elkins in Houston, Texas, and an ALI member, said the draft has drawn much criticism because the institute’s position is “fundamentally hostile to the First Amendment and the Matusevitch line of cases.”

In comments submitted to ALI in response to the draft, Leatherbury urged that the First Amendment discussion be removed altogether. “This dangerous and unsupported statement ignores the well-established chilling effect of large actual and punitive damage awards and litigation costs on the press,” Leatherbury wrote. Furthermore, he added, differing interests in freedom of expression should trump a libel plaintiff’s efforts to have a judgment enforced in the U.S.

The First Amendment is implicated even when libel plaintiffs come to the U.S. to collect, Leatherbury argued, because constitutional review is avoided in the country where the judgment is awarded.

“The (draft ALI) notes can and will be construed as encouraging more forum shopping and more foreign libel litigation against United States-based publishers and broadcasters,” he wrote, “without the prospect of meaningful constitutional review when the judgment is brought to the United States for collection.”

The Matusevitch line

Enforcement of foreign judgments is currently a state issue in the U.S. More than 30 states have adopted the Uniform Foreign Money Judgments Act, which requires courts to give “full faith and credit” to fair and legitimate money judgments. However, the act contains an exception for judgments that are “repugnant to the public policy of [the enforcing] state.”

In granting a motion to dismiss a British libel judgment against a radio broadcaster living in Maryland, the U.S. District Court in Washington, D.C., held that the ruling in Matusevitch v. Telnikoff was “based on libel standards that are repugnant to the public policies of the State of Maryland and the United States.”

The case was the first in a line of American court decisions that refused to enforce foreign judgments that restrict the freedom of the press because they are “repugnant to the public policy” of the state.

The court compared the libel laws of Great Britain and the U.S., and concluded that they were fundamentally different. In particular, the court noted, British law does not require a libel plaintiff to prove actual malice — a reckless or knowing disregard for the truth — when the plaintiff is a public figure, and does not consider the context of the allegedly defamatory speech when determining liability. The court cited the First and Fourteenth Amendments of the U.S. Constitution as well as Maryland’s Uniform Foreign-Money Judgments Recognition Act in its ruling.

A New York state court similarly refused in 1992 to enforce a British libel judgment brought by an Indian national against the operator of the New York news wire service India Abroad Publications. The court applied the public policy exception in the New York statute on “Recognition of Foreign Country Money Judgments.” It then held that enforcement of the libel judgment — the plaintiff did not have to prove fault on the part of the press — would be repugnant to the First Amendment and New York’s state constitution.

As repugnant as they are, however, foreign libel suits still cost American media companies plenty. Just fighting a lawsuit abroad is a major financial drain. What’s more, said Leatherbury, these suits have forced publishers to second-guess editorial decisions. Foreign libel suits, Leatherbury said, have “taken away some of the predictability of litigation that publishers have grown accustomed to in the U.S.”

Ultimately, Wimmer hopes that the U.S. government will make jurisdiction in media cases a trade issue, and negotiate with foreign governments to obtain agreements that foreign courts will not assume jurisdiction over the U.S. news media. However, as he pointed out, that strategy — which would have to succeed on a country-by-country approach — could take a very long time to implement. u