On 26 October 2023 the Economic Crime and Corporate Transparency Act 2023 (ECCTA 2023) was enacted. In this post I consider why sections 194 and 195 of the Act, which were introduced by the government to tackle SLAPPs that feature economic crimes, are potentially problematic.
SLAPPs are the subject of an intense and polarised debate between critics concerned that there is a pressing ‘SLAPP problem’ that threatens free speech, and opponents who contend that the so-called ‘SLAPP problem’ has been overstated. Unfortunately, there is no legal definition of a SLAPP, and there are no official statistics on SLAPP cases in the UK or in Europe. In fact, the European Court of Human Rights first used the term ‘SLAPP’ only as recently as 2022 in OOO Memo v Russia. This absence of concrete evidence of the extent of SLAPPs is unsurprising when one considers that SLAPPs that progress to formal proceedings – and are therefore easy to quantify – are the tip of the iceberg – hence why I tend to refer, in this post, to instigators and targets rather than claimants and defendants.
Often the mere threat of litigation from the SLAPP instigator is enough to prevent the would-be SLAPP target from continuing their ‘public participation’. Therefore, the ‘action’ does not proceed any further than a ‘threat’. For these instigators they may know that, if taken further, they have very little or no chance of ‘winning’ their claim and receiving damages. That is not their objective. Rather, their objective is to use the threat to scare a target into not, for instance, publishing an article. SLAPPs can, therefore, represent a form of shadow litigation, to which a further layer of secrecy is sometimes added when the SLAPP is facilitated by agents, in the form of reputation management firms, who operate outside of the regulatory frameworks that oversee solicitors and barristers.
Despite the dearth of official statistics, we can point to a helpful body of data on the phenomenon from civil society organisations, particularly the Coalition Against SLAPPs in Europe (CASE), which shows that the use of SLAPPs is increasing. In its 2022 report Shutting Out Criticism: How SLAPPs Threaten European Democracy CASE found 570 SLAPP cases in 29 European countries between 2010 and 2021, noting an increase in the number of cases of 43.5% in 2019, 15.2% in 2020 and a slight decrease of 2.6% in 2021. Its 2023 report SLAPPs: a threat to democracy continues to grow provides further evidence of this upward trend in the use of SLAPPs, as it identifies over 820 SLAPPs, compared with the 570 in the 2022 report. The report identifies the UK as a SLAPP hotbed, and ‘forum of choice’ for would-be SLAPP instigators (as well as Malta, France, Turkey, Croatia, Greece and Georgia). This is predictable when you consider: (i) the high costs of defamation litigation in the UK, which tends to be the most common SLAPP cause of action vehicle (although, other causes of action are used for the purpose of SLAPPs, including misuse of private information, breach of data protection law, and breach of copyright, among others) (ii) the fact that, the defence of truth under section 2 of the Defamation Act 2013 applies a reverse burden of proof, which means that unless the defendant can prove that the defamatory statement is true on the balance of probabilities, it is presumed to be false, and (iii) that the law allows foreign claimants. The combination of these factors deters SLAPP targets from defending the threat or claim.
Bearing in mind the trends reported by CASE in 2022 and 2023, you would expect the UK government to want to investigate, and then tackle the issue. In 2022 it seemed that this would be case, with the Ministry of Justice issuing a Call for Evidence on SLAPPs from March to May of that year, which was followed in July 2022 by the government’s Response to the Call for Evidence – both of which primarily focussed on the role played by defamation law in facilitating SLAPPs. However, after this flurry of activity it all went rather quiet, until amendments to the Economic Crime and Corporate Transparency Bill (which became the ECCTA 2023 on the 26th of October 2023) were proposed to tackle SLAPPs that feature economic crimes – and you may have noticed, that all of a sudden, there were no defamation reforms in sight. This type of SLAPP is dealt with at sections 194 and 195 of the Act, with section 194 prescribing that the Civil Procedure Rules must make provision for ensuring that a claim may be struck out before trial where the court determines a claim is a SLAPP claim and that the claimant has failed to show that it is more likely than not that the claim would succeed at trial. The meaning of a SLAPP claim is set out in section 195. Section 195(1) provides that:
For the purposes of section 194 a claim is a “SLAPP claim” if (a)the claimant’s behaviour in relation to the matters complained of in the claim has, or is intended to have, the effect of restraining the defendant’s exercise of the right to freedom of speech (b)any of the information that is or would be disclosed by the exercise of that right has to do with economic crime,(c)any part of that disclosure is or would be made for a purpose related to the public interest in combating economic crime, and (d) any of the behaviour of the claimant in relation to the matters complained of in the claim is intended to cause the defendant (i)harassment, alarm or distress, (ii)expense, or (iii)any other harm or inconvenience, beyond that ordinarily encountered in the course of properly conducted litigation. [Emphasis added].
Sections 194 and 195 are concerning for reasons I will turn to now. Firstly, the limited scope of these provisions, in that they only relate to economic crime – and therefore do not tackle the giant elephant in the room that is defamation – has, understandably, been the subject of criticism. The government’s response to this is that: ‘[a]t least 70% of the cases referenced in a report about SLAPPs, published in April 2022 by the Foreign Policy Centre and ARTICLE 19, were connected to financial crime and corruption’, that the Act ‘presents the earliest opportunity to pursue reforms that address a significant proportion of SLAPP activity featuring economic crime’ and that ‘the government is considering future legislative options to introduce comprehensive anti-SLAPP measures as soon as parliamentary time allows.’ The response goes on to say that: ‘[w]e will cap costs via secondary legislation. We will work with the Civil Procedure Rules Committee to introduce a costs protection scheme to stop costs from racking up and address the stark inequality of arms in SLAPPs cases.’
The glaring issue with the scope of this regime is that it is out of step with what is happening in Europe. For example, the Council of Europe’s (CoE) Committee of Experts on SLAPPs has recently submitted its Draft Recommendation on countering the use of strategic lawsuits against public participation (SLAPPs) to the Council of Ministers for adoption in early 2024. As the UK’s independent member of that Committee I saw first-hand the appetite from, not only European institutions, such as the CoE and the European Commission, but also from the CoE member states to create a Recommendation with the widest possible scope to give member States the tools to tackle SLAPPs from every possible angle. This is certainly not what we have with the ECCTA 2023. Notwithstanding this issue, the provisions in the Act, and the government’s response, in my view at least, raise concerns relating to early dismissal of SLAPP claims, and the intention of claimant, and the UK’s costs culture, which I will set out in turn. However, at this juncture, it is important for me to make clear that the concern relating to costs is a general one (and bears particularly upon defamation claims) and does not relate specifically to economic crime.
The prevailing view has been that there needs to be an early-dismissal mechanism to deal with SLAPPs, which appears in the ECCTA by virtue of section 194, albeit this will be facilitated through the Civil Procedure Rules. This is a thorny issue that I continue to wrestle with, and indeed I have, in the past, argued for the introduction of such a mechanism. Nevertheless, such a mechanism is problematic for two reasons. Firstly, SLAPPs are, by their nature, vexatious, malicious, and unmeritorious – thus, it is not in the instigator’s interests that their claim proceed too far through the legal system for fear it will be summarily dismissed. For instigators, as I have stated above, the optimal result is achieved when the mere threat of legal action cows the target into silence or retraction. We also know, again as I have previously outlined, that these threats often come through ‘agents’, such as reputation management firms operating outside of legal regulation. Therefore, fundamentally, there is an argument to be made that law and procedure, including early dismissal mechanisms, are blunt instruments to solve the SLAPPs problem. Secondly, notwithstanding my first point, the introduction of an early dismissal mechanism could add to, rather than mitigate, the existing problem with SLAPPs, as it presents an added layer in the litigation process that could potentially lead to lawyers getting bogged down in legal argument which, in turn, will increase costs. We must also remember that the financial cost is the tip of an iceberg for targets. There is the physical, emotional, and mental toll that will almost always be taken – an extra layer of litigation could add to that.
The third concern directly relates to the first and second concerns. The early dismissal mechanism in section 194 hinges on the claim being defined as a SLAPP under the meaning in section 195, which in turn depends upon the intention of the claimant, which will often be practically and evidentially difficult (at best) to assess, and may never come to light. Ultimately, determining intent could add to the complexity, and therefore the length and cost, of the early dismissal process, thereby defeating its purpose.
The fourth concern relates to the UK cost culture, which is particularly pertinent to defamation claims. The current ceiling for damages awards in defamation claims is £300,000 (which in itself is a large amount of money), but costs awards can be significantly higher (for example, the costs in Vardy v Rooney [2022] EWHC 2017 (QB) amounted to approximately £1.5 million). In its Response to the Call for Evidence on SLAPPs the government suggested that people defending themselves from SLAPPs could be protected by a £5,000 costs cap ([239], 50). However, as I have previously argued, if we are going to cap costs for SLAPP claims, and if this is going to be effective, we also need to cap costs for all defamation claims (and also for other causes of action used for the purposes of SLAPPs, attracting high costs). This is because, as I have stated above, the nature of SLAPPs means that the ‘threat’ is often more than enough to prevent the expression or the publication. As we know this ‘threat’ may come before any formal claim is started. So even where we have an early dismissal mechanism, where the potential SLAPP vehicle is defamation, at this point the target will still not know whether the claim is a SLAPP claim or whether they are faced with a legitimate claim for defamation (etc) that could be allowed to proceed. Therefore, the threat is supported, and is given weight, by the costs incurred and the damages awarded for legitimate defamation (etc) claims. This means that at the point at which the ‘threat’ is made and received the target may be thinking to themselves “I don’t know whether a judge will determine whether this is a SLAPP, and if they do not, I could be subject to substantial costs and or damages. Therefore, I am not going to risk publication.”
Of course, it remains to be seen how effective the limited ECCTA 2023 SLAPPs regime will be, and whether this government will ever get round to “considering future legislative options to introduce comprehensive anti-SLAPP measures.” With a change of government looking likely in 2024, I think the chances of this are slim at best. It will, I think, be left to the next government to decide whether it wants to pick up the ‘SLAPPs hot potato’ and present a more comprehensive legislative regime…so watch this space!
Dr Peter Coe, Associate Professor, Birmingham Law School, University of Birmingham; Senior Visiting Research Fellow, School of Law, University of Reading; Associate Research Fellow, Institute of Advanced Legal Studies and Information Law and Policy Centre, University of London. This post will appear as the Editorial in the February issue of Communications Law, and is published here with thanks.
fascinating, thank you