Firms shop around for Net law jurisdictions

The global nature of the Internet makes it possible for companies to pick their country when it comes to online defamation cases

The Internet is encouraging companies whose reputation has been damaged through online defamation, to "forum shop" for countries where the law best suits their case.

A conference on the subject of employees and the Internet on Tuesday revealed that the international nature of the Web has created the option for companies who have been defamed on the Internet, to sue in any country where the libellous material has been accessed. Companies can choose the country in which they press charges, in order to stand a better chance of winning, or to push for greater damage repayments.

"Once libellous material is posted on a Web site, within seconds it can be published globally," said David Engel, lawyer at city firm Theodore Goddard. "This makes it an option for the claimant to sue in any jurisdictions where they have a corporate presence."

Engel explained that although a company could theoretically sue in any country where the defamatory material was accessed, in practice this will be limited to the areas in which the business has a presence. It will also be restricted to any country where the claimant company has received damage to its reputation.

And within the European Union, when defamatory material is published across a number of member states through the Internet or email, the defendant can be sued in the member state in which it is located, as well as in any European country where damage was incurred to the claimant's trading reputation.

"In the UK defamatory laws are more claimant friendly, whereas in the US there is a much stronger commitment to freedom of speech, but American libel cases can offer multi-million dollar awards," said Engel.

In order for a defamation case by email or the Internet to be actionable, there must firstly be a defamatory statement made online. This must refer to a specific victim, and be published to a third party whether by email or a Web site. "The specialist nature of newsgroups in particular means that defamatory material can be highly targeted at people to whom its publishing will be most damaging," said Engel.

Publishers as well as authors can be held liable for online defamation, meaning that company directors are often placed in the line of fire for their employee's misuse of the Web. "Authors are often out of the jurisdiction which makes it difficult for a judgement to stick, as well as authors not being worth it financially," argued Engel. The Defamation Act of 1996 offered a new Internet defence for companies who have "unwittingly" provided a conduit for others to publish defamatory material, but this puts the onus back on employers to prove that the material was disseminated innocently.

In 1995, UK building society Western Providence sued its competitor Norwich Union for £450,000, after the company was found to be circulating defamatory emails about them.

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