March 21, 2013

On the evening of Monday 18 March 2013, some seminal agreements were reached in Parliament in the press regulation debate:

1. An all-party agreement was reached on the wording of a draft Royal Charter on Self-Regulation of the Press;
2. The House of Lords approved an amendment to the Enterprise and Regulatory Reform Bill regarding royal charters; and
3. The House of Commons approved amendments to the Crime and Courts Bill regarding awards of exemplary damages and costs against “relevant publishers” who are not members of an approved regulator.

 

The Royal Charter

This creates the body which will recognise the regulator, it does not create the regulator itself. That will be for the industry to do. However, as well as setting out the constitution, appointment, functions and funding of the Recognition Body, it also sets out the criteria which the new regulator must meet in order for it to receive the recognition body’s approval. Key points include:

• The charter cannot be amended or dissolved without approval by a two thirds majority of those who vote in each of both Houses of Parliament.
• For the first three years, the recognition body will be funded by the Exchequer. It will then charge the regulator for the recognition and review functions it administers, with the aim of recovering its costs in full. These will presumably be passed on to members of the regulatory body, who will be fully funding the regulator itself.
• The Commissioner for Public Appointments shall appoint the Appointments Committee, which will in turn appoint the board of the recognition body.
• The recognition criteria which the new regulator will have to meet largely follow the Leveson recommendations. They include:
  • Membership will be open  to anyone (other than broadcasters) who publishes in the UK a newspaper, magazine or website containing news, information or opinions about news or current affairs or gossip about celebrities, public figures or other people in the news.
  • Membership can potentially be offered on different terms for different types of publishers.
  • There are still ambiguities in the regulatory board’s appointment process eg. it refers to the appointment panel containing a “substantial” majority of members independent of the press, and the Board containing a “sufficient” number of people  with experience of the industry.
  • Members must have appropriate internal governance processes and a speedy complaint handling mechanism.
  • The regulator will have the power (but not the duty) to hear complaints from representative groups and third parties as well as anyone personally affected.
  • Sanctions will include:
  • Fines of up to 1% of turnover attributable to the publication concerned, with a maximum of £1 million.
  • If the parties cannot reach agreement, the power to direct the nature, extent and placement of corrections and apologies.
  • A ring-fenced enforcement fund, into which receipts from financial sanctions could be paid for the purposes of funding investigations.
  • An “inexpensive” arbitration scheme which is free for complainants.

Enterprise and Regulatory Reform Bill

Usually, a Royal Charter can be amended by politicians, in the form of privy counsellors, through the Privy Council. Given the vociferously-expressed concerns that political interference in press freedom should not be allowed, the following amendment to the Enterprise and Regulatory Reform Bill has been agreed with the aim of removing that risk.

“Where a body is established by Royal Charter after 1 March 2013 with functions relating to the carrying on of an industry, no recommendation may be made to Her Majesty in Council to amend the body’s Charter or dissolve the body unless any requirements included in the Charter on the date it is granted for Parliament to approve the amendment or dissolution have been met.”

This, means that any relevant royal charter approved after 1 March 2013 cannot be amended unless Parliament has approved any changes – and in the case of the royal charter on press self-regulation, this requires a majority of two-thirds of those who vote in each of both Houses.

Crime and Courts Bill

These amendments effectively mean that if a “relevant publisher” (see below) is not a member of the new regulator, it is more likely to have exemplary damages and/or costs awarded against it in litigation. These provisions have been described by the government as “incentives” for publishers to sign up to the new regulatory system. Key points include:

• Exemplary damages may be awarded against “relevant publishers” if sued in relation to the publication of news-related material (including gossip about celebrities/public figures) – although if the publisher is a member of an approved regulator, the presumption is that exemplary damages should not be awarded unless certain criteria are met.
• When deciding whether to award exemplary damages, the court must take into account:
  • Whether membership of an approved regulator was available and, if so, why the defendant was not a member
  • Whether the defendant had satisfactory internal compliance procedures in place and whether they were adhered to
  • The court may regard deterring the defendant and others from similar conduct as an object of punishment
• Costs should not be awarded against a relevant publisher defendant if it is a member of an approved regulator (or could not be for some good reason) unless the claim could have been resolved through the regulator’s arbitration scheme, or it is otherwise just and equitable in the circumstances of the case to do so.
• If, however, the relevant publisher defendant is not a member of an approved regulator (but could have been) the presumption is that costs must be awarded against it (win or lose) unless the claim could not have been resolved through the regulator’s arbitration scheme or it is otherwise just and equitable in the circumstances of the case not to do so.
• A “relevant publisher” for the purpose of these provisions is one who (subject to certain exclusions) in the course of a business (whether carried on for profit or not) publishes news-related material which is
  • Written by different authors, and
  • To any extent subject to editorial control (ie. there is a person who has editorial or equivalent responsibility for the content, how the material is presented and the decision to publish). Website operators who did not post the material on the website themselves are expressly excluded as having editorial or equivalent responsibility for that material.

This aims to exclude small-scale bloggers and the like, to whom the usual laws would apply. The amendments also list specific exclusions including broadcasters  and book publishers, and special interest titles, scientific or academic journals, public bodies and company newsletters which only contain news-related material on an incidental basis which is relevant to their main content.

It is proposed that these provisions should come into effect 1 year after the date on which the recognition body is established by Royal Charter, the aim being to incentivise the press to get on with setting up the new regulator quickly.

Comment

These proposals raise a number of serious questions for the industry, including:

• Although politicians insist that these changes do not amount to statutory underpinning for a new regulator, when costs and damages penalties are put in place through legislation which effectively leave publishers no option but to join the new regulator, how can this be considered anything other than statutory underpinning through the back door?
• Can a Royal Charter effectively prevent interference by politicians in press freedom when the proposals will not be binding on future Parliaments – what guarantees are there that the proposed “safeguards” won’t be repealed by a simple majority by a future Parliament?
• Given the extensive powers, functions and duties imposed on the recognition body and the regulatory body, can this proposed system be anything other than crippling in terms of cost for all but the very largest and profitable publishers?
• Will an arbitration scheme do anything other than add another layer of unnecessary cost for the industry?  As Sir Edward Garnier said during the Commons debate “the Secretary of State should be careful not to be seduced into thinking that arbitration equals no expense, no time, and simplicity. The sorts of cases that go to arbitration can be just as complicated as those which go to court and the expense involved in a fully tuned-up arbitration is no less than a piece of litigation. So this is a jolly good idea and let us all say how wonderful it is, but let us not seduce ourselves into thinking that arbitration is some magic answer, because there will be plenty of cases where the interlocutory procedures will be far too complicated for speedy mediation or arbitration under the regulatory scheme.”
• If fines are to be ring-fenced to fund investigations, will that create an inherent conflict of interest whereby the regulator needs to impose fines in order to fund its activities?
• There is a real concern that the costs and exemplary damages sanctions proposed in the Crime and Courts Bill contravene publishers’ Article 6 rights to a fair trial as well as their Article 10 rights. If a defendant publisher who is not a member of the regulatory body successfully defends a claim and its conduct has been irreproachable, can it be fair to punish it simply because it was not a member of the regulatory body?

It remains to be seen how these will be addressed.

If you would like any further information, please contact Caroline Kean or Amali de Silva