Friday, January 28, 2011

Company can sue for defamation

This article was recently published by STAR which clearly states that Company has the right to sue for defamation. Do you agree?

Companies and corporate bodies can be defamed, just like individuals, because the law of libel is the same for all plaintiffs.

ONE often hears and reads about individuals – whether prominent personalities or ordinary citizens – who bring an action for defamation because of perceived damage to reputation. Defamation comprises libel and slander. The former refers to defamation in a permanent form, while the latter refers to defamation in a transient form.

Of course, well-known personalities naturally feel offended and hurt about statements that disparage them. But lesser known people are also sensitive to such statements. In fact, a private person has more reason to feel aggrieved because it is an unwarranted intrusion into his life.

However, though it is usually individuals who feel hurt over derogatory statements, it is sometimes a company that complains. As a reader points out, a company being an artificially created person in law, cannot have feelings and should therefore not be entitled to sue. But companies have rights, too.

Case in point

Such a situation arose in the case of Jameel (Mohammed) vs Wall Street Journal Europe Sprl. The gist of the article stated that the Saudi Arabian Monetary Authority was, at the request of the United States law enforcement agencies, monitoring bank accounts associated with some of the country’s most prominent businessmen in a bid to prevent them from being used, wittingly or unwittingly, for funnelling funds to terrorist organisations.

In the article headlined: “Saudi officials monitoring certain bank accounts” accompanied by the sub-heading, “Focus is on those with potential terrorist ties”, a number of companies and individuals were named, among them “the Abdullatif Jamil group of companies”. It later turned out that the information that was received from reliable but undisclosed sources was not correct, at least in relation to reference to one of the plaintiffs.

Basically libel has always been viewed as a wrong for which action can be taken without having actual damage proven. All that needs to be proven is that there has been published a false statement damaging to a person’s reputation without lawful justification.

But as a company is an artificial entity, albeit a legal one and is therefore incapable of any feelings, can it be defamed? It was argued in South Hetton Coal Co Ltd vs North-Eastern News Association Ltd more than a hundred years ago that this rule did not apply to trading companies.

The newspaper in that case had published an article strongly critical of the way in which the plaintiff, a colliery owner, housed its workers, and the company had not pleaded or proven any actual damage.

It was argued for the publisher that a corporation could have no personal character, and that the article had not related to the business of the company. The Court of Appeal rejected the argument. Lord Esher MR held the law of libel to be one and the same for all plaintiffs. While he referred to obvious differences between individuals and companies, his lordship reiterated that a company was capable of being defamed just like an ordinary individual.

No feelings

It is, of course, the case that a company itself certainly does not have any feelings nor is it capable of being embarrassed. It cannot therefore be said to experience the feeling of hurt by what is published even though defamatory. Such a view is sometimes relied upon by what was said in Lewis vs Daily Telegraph Ltd, where Lord Reid pointed out that a company cannot be injured in its feelings but only in its pocket.

However, the fact remains that damage to reputation being the essence of the matter, corporate bodies are capable of being defamed if their reputation is damaged. As was said by Lord Bingham of Cornhill in Jameel (Mohammed) vs Wall Street Journal Europe Sprl, a company may maintain an action for a libel reflecting on the management of its business without causing or proving special damage.

Attempts have, however, been made over the years to limit the right of companies to sue for defamation or at least to limit the scope for doing so. The Faulks Committee on Defama­tion, in its report in 1975, recommended amendments in this regard. However, these were not amendments to which Parlia­ment in England chose to give effect.

Otherwise questions also arise where the party suing is not a trade organisation but a local authority or a trade union. Such a case arose in National Union of General and Handicraft Workers vs Gillan, and the subject was addressed in the judgment of Lord Keith of Kinkel in the following words: “The authorities clearly establish that a trading corporation is entitled to sue in respect of defamatory matters which can be seen as having a tendency to damage it in the way of its business.

“The South Hetton Coal Co case would appear to be an instance of the latter kind, and not an authority for the view that a trading corporation can sue for something that does not affect it adversely in the way of its business.

“The trade union cases are understandable upon the view that defamatory matters may adversely affect the union’s ability to keep its members or attract new ones or to maintain a convincing attitude towards employers.

“Likewise in the case of a charitable organisation, the effect may be to discourage subscribers or otherwise impair its ability to carry on its charitable objects. Similar considerations can no doubt be advanced in connection with the position of a local authority. Defamatory statements might make it more difficult to borrow or to attract suitable staff and thus affect adversely the efficient carrying out of its functions.”


The authorities clearly establish that a trading corporation is entitled to sue in respect of defamatory matters which can be seen as having a tendency to damage it in the way of its business. The feeling of hurt which may be felt by the individual is not after all an ingredient of the wrong of libel.

The element of hurt may have a role in propelling an individual to act. The gravity of the hurt may be a factor to consider when assessing the damages but that is only after liability has been established.

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