THE AUTHORS:
Will Hooker, Partner at Alston & Bird
Sophia Lekakis, Senior Associate at Alston & Bird
When a new matter lands on the desk of any commercial arbitration practitioner, it typically involves a contract with a broadly drafted arbitration clause. Almost by definition, arbitrations arise out of contract, and the principal causes of action are contractual. At a stretch, the typical arbitration may encompass various economic torts or complex jurisdictional issues. However, it is possible that the underlying facts are highly supportive of drafting a defamation claim in the request for arbitration. Are there any particular considerations when it comes to such claims? This article examines some of the potential issues.
Did the Parties Consent to Arbitrating the Defamation Dispute?
As with any arbitration claim, consent is key. Where the parties agree to resolve a defamation dispute through arbitration, there is no general jurisdictional or admissibility principle that prevents them from doing so. This is, of course, subject to exceptions. Criminal defamation claims would, for example, be subject to the usual arbitrability principles and remain barred from being heard in arbitration (see, Adactive Media Inc v Mark Ingrouille [2021] EWCA Civ 313 at [69]).
In the context of commercial contracts, the question is whether the arbitration clause properly captures the defamation claim, failing which the tribunal would not have jurisdiction to hear that claim.
Under the ‘pro-arbitration’ presumption prevalent in many developed common and civil law jurisdictions, tort claims relating to the parties’ contractual relationship are very likely to be treated as falling within the scope of a broadly drafted arbitration clause (see, ‘Chapter 4: Interpretation of International Arbitration Agreements’, in Gary B. Born, International Arbitration: Law and Practice (Third Edition), (Kluwer Law International; Kluwer Law International 2021), 103 – 112. Chapter 2: Drafting International Forum Selection Clauses’, in Gary B. Born, International Arbitration and Forum Selection Agreements: Drafting and Enforcing (Sixth Edition), (Kluwer Law International 2021), 15 – 34).
English law has been at the forefront of this approach. English courts will construe an arbitration agreement to encompass the widest range of potential disputes that its terms reasonably permit, including non-contractual claims (see, Russell on Arbitration 24th Ed., at 2-004). The tendency is to treat claims based on other causes of action as falling within the tribunal’s jurisdiction, particularly if they relate to the same facts as other contractual claims that fall within the arbitration agreement (see, Russell on Arbitration 24th Ed., at 2-099). The rationale is that, unless specified otherwise, rational businessmen would have intended that all disputes relating to their relationship be dealt with by the same tribunal (see, Fiona Trust & Holding Corp v Privalov [2007] UKHL 40).
Defamation claims are no exception. For example, in Ecobank Transnational Incorporated v Tanoh, a case concerning an anti-enforcement injunction, the court considered that there was a high probability that a defamation claim fell within the arbitration clause (see, Ecobank Transnational Incorporated v Tanoh [2015] EWCA Civ 1309 at [75]-[77]. For a non-English law case example where defamation claims were heard in the arbitration, see ‘Sojitz Corporation v Prithvi Information Solutions Limited (Final Partial Award), LCIA Case No. 19419, 29 April 2011′, Arbitrator Intelligence Materials (Kluwer Law International). The court noted that while it was unusual at first blush for a defamation claim to be the subject of an arbitration under an employment contract, the defamation claim had a “very close connection” with the employment agreement. It was based on a letter sent by a major shareholder and director of the company to the company’s board with the aim of securing the claimant’s dismissal. The defamatory material in the letter related to the claimant’s acts and omissions under the employment agreement, and therefore any justification of the defamation would depend on an examination of that performance. Moreover, there was a manifest disadvantage of not having the defamation claim addressed in the arbitration. The claimant’s dismissal was within the arbitration agreement. The arbitrator would have to determine the truth of the allegations relied on in support of his dismissal. The same allegations would likely be central to the defamation proceedings. Having the allegations addressed in both arbitration and court would greatly increase the cost, and potentially lead to diametrically opposite conclusions regarding the same matters.
A Special Example: Claims Against IPSO-Regulated Newspapers
Contracts are not the only context in which the possibility of resolving defamation claims through arbitration has been raised.
Following a consultation in 2015, the Independent Press Standards Organisation (“IPSO”), the regulator of most of the UK press, established an arbitration scheme for resolving defamation claims against IPSO-regulated newspapers. All IPSO-regulated national newspaper publishers are members of the compulsory scheme. That means that if a claimant wishes to make a claim against them in arbitration, they must agree to that process. Some participating publishers are members of a voluntary scheme, meaning that a claimant can request to submit the claim to arbitration, but they can refuse to participate.
Any arbitration under the scheme would be subject to the IPSO Arbitration Scheme Rules 2018 (“IPSO Rules”). Notably, these rules provide that certain claims may not be suitable for arbitration under the scheme, for example, if it would be in the public interest or in the interest of the parties to have a determination made by the court, or if the relief available under the scheme would not provide an effective remedy (see, IPSO Rules, para 12.6). Another important aspect of IPSO arbitration is that, unless the parties agree otherwise, the maximum sum of damages that may be awarded is £60,000 (see, IPSO Rules, para 31.4). In terms of relief, arbitrators appointed under the scheme have the same powers to grant relief as the court (subject to the IPSO Rules) and must apply the law applicable to the seat of the arbitration (which is London, unless agreed otherwise by the parties) (see, IPSO Rules, para 31.2. See also para 6.3).
An external review of the IPSO arbitration scheme from 2023 found that take-up was low in the first three years since its introduction. This was said to be, however, not due to low demand for participation in the scheme, but rather principally as a result of the lack of general awareness regarding its existence.
What the existence of the scheme does demonstrate is the arbitrability of defamation claims and the appetite to use arbitration as a dispute resolution mechanism.
What Relief can a Party seek in Arbitration Proceedings?
Taking it back to the commercial context, assuming that a claimant does succeed in convincing the tribunal that its defamation claim is properly within the arbitration clause, a question then arises as to the type of relief that such party can seek in arbitration. In defamation cases, unsurprisingly, damages may not be a sufficient remedy, although they are often sought (including nominal damages (see, e.g., Anthony Canham, ‘Award No. 2 In The Case Of Meadowsweet V Bindweed’, Arbitration: The International Journal of Arbitration, Mediation and Dispute Management, (Chartered Institute of Arbitrators (CIArb); Kluwer Law International 2000, Volume 66, Issue 2), 117 – 133); and, in the United States, punitive damages (see, e.g. Trafelet v. Cipolla, *7). More than anything, an action in defamation seeks to protect a party’s reputation, which may well have a public dimension. This means that the most attractive remedies for a claimant are likely to be some form of apology, retraction, and/or corrective statement.
Can these remedies be obtained in an English seated arbitration?
Under section 48 of the English Arbitration Act, in the absence of the parties’ agreement, the tribunal:
- May make a declaration as to any matter to be determined in the proceedings;
- May order the payment of a sum of money; and
- Has the same powers as the court to order a party to do or refrain from doing anything, to order specific performance of a contract (other than a contract relating to land), and to order the rectification, setting aside, or cancellation of a deed or other document.
In a litigation scenario, beyond damages, declarations, and injunctions, there are two noteworthy types of relief relevant to defamation cases, both of which serve the victim’s need to be vindicated and to have the record corrected.
- First, the court generally has the power to order the defendant to publish a summary of the judgment (the details of which would be for the parties to agree, failing which they would be determined by the court) (Defamation Act 2013, section 12).
- Second, while the publication of an apology is not a type of relief that can be awarded by the court, in cases that settle before trial, there is a possibility to read, either jointly or unilaterally, a Statement in Open Court. This statement typically summarises the factual background and discloses the fact of a settlement being reached, but it may also be possible for it to include an apology/retraction by the defendant.
In light of section 48, in theory, these remedies would also be available in an arbitration context.
What is the Impact of Confidentiality Regimes?
But this is not where the story ends. Theory and practice here may differ. Given that the purpose of bringing a defamation claim is usually to vindicate the claimant’s reputation, is there a risk — given the prevalence of confidentiality in arbitral proceedings— that the claimant may not be able to tell the world about it? If not, it might be said that the whole purpose of the claim would have failed.
In English-seated arbitrations, the confidentiality of arbitration is a long-established presumption and remains a significant consideration for parties when selecting arbitration over litigation. The basic rule is that, unless the parties expressly dispense with confidentiality, there is an implied obligation to maintain the confidentiality of the hearing, the award, and other materials relating to the proceedings (see, Dolling-Baker v Merrett [1990] 1 WLR 1205; Ali Shipping Corporation v Shipyard Trogir [1999] 1 WLR 314).
However, confidentiality is not absolute in any way. Nor, according to the Law Commission, is it necessarily the default. Its limits were set out in a non-exhaustive fashion by the Court of Appeal in the leading case of Emmott v Michael Wilson & Partners Ltd: “The first is where there is consent, express or implied; second, where there is an order, or leave of the court (but that does not mean that the court has a general discretion to lift the obligation of confidentiality); third, where it is reasonably necessary for the protection of the legitimate interests of an arbitrating party; fourth, where the interests of justice require disclosure, and also (perhaps) where the public interest requires disclosure.” (see, Emmott v Michael Wilson & Partners Ltd [2008] EWCA Civ 184 at [107], endorsed in Halliburton v Chubb [2020] UKSC 48, [2020] 3 WLR 1474 at [85]).
A good example is Westwood Shipping (see, Westwood Shipping Lines Inc, Weyerhaeuser NR Company v Universal Schiffahrtsgesellschaft MBH, Michael Bremen [2012] EWHC 3837 (Comm) at [14]). In that case, the claimants sought to use materials from the arbitration to pursue an unlawful means conspiracy claim. The court held that the claimants had a legitimate interest in obtaining the arbitration materials for that purpose. But beyond that, it was held that it would, in any way, be in the interests of justice to disclose the materials on the basis that the court should not allow confidentiality “in any sense to stifle the ability to bring to light wrongdoing of one kind or another”.
When it comes to defamation claims, it might be argued, based on the nature of the claim and the purpose of the related relief, that publishing the result of the arbitration should constitute a legitimate exception to the general confidentiality rule. It could be said in this regard that a party who has suffered wrongdoing in having had its reputation tarnished publicly should have the ability to get public vindication by exposing – or in the words of the court in Westwood Shipping, “bring[ing] to light” – the wrongdoing of the defaming party.
While it may be argued that the parties expected the arbitration to remain confidential when they entered into the arbitration agreement, it would be interesting to see how a court or tribunal addresses this in the context of defamation claims, especially when there is widespread publication of the defamatory statement. Would the parties realistically have expected to be able to defame each other publicly, without the result of a defamatory action also becoming public?
Naturally, if the award is disclosed, the outcome of a defamation claim may also be revealed. It is generally thought that when it comes to the award, confidentiality exceptions are more likely to come into play. A party may need or want to disclose an award for various reasons, e.g., in third-party proceedings or because of disclosure obligations applying to publicly listed companies. The award would certainly also need to be disclosed in any related enforcement proceedings.
However, these circumstances are not necessarily applicable in any given arbitration case. Enforcement proceedings may not be necessary (as the losing party may comply with the award immediately after the award is issued). The parties may not be publicly listed companies. Or the disclosure of the award may not be to the public, but only to limited parties (e.g., insurers or investors). This leaves a gap in the publication of results from defamation cases, even if the only remedy is damages.
In at least one arbitration case, a French-seated tribunal did not rule out the possibility of publishing the award in order to repair reputational damage suffered by a party (see, Austrian party v. French party, 121 J.D.I. 1064 (1994), and observations by Y. Derains discussed in ‘Part 4: Chapter IV – The Arbitral Award’, in Emmanuel Gaillard and John Savage (eds), Fouchard Gaillard Goldman on International Commercial Arbitration, (Kluwer Law International 1999), 735 – 780). It was suggested, however, by a commentator that such a measure could only be adopted with the greatest caution and that it raised a question of compatibility with the applicable institutional rules (see, ibid).
Of course, there is a difference in proportionality between publishing the entire award and only a summary of it. The English court’s ability to order the defendant to publish a summary of the judgment— a power also available to arbitrators in IPSO arbitration (see, IPSO Rules, para 31.2(h)) — is instructive in this sense. Equally instructive is the flexibility of the confidentiality rules in IPSO arbitration, under which the arbitrator shall determine whether a final ruling should be published (see, IPSO Rules, para 32.7). Under the IPSO Rules, it appears that the default rule is for the final ruling to be published on IPSO’s website, unless the arbitrator directs that it should be made confidential (see, IPSO Rules, para 32.8).
Conclusion
While defamation claims are generally capable of being resolved by arbitration, there is some tension between the purpose of the relief (i.e. vindication of one’s reputation) and regimes assuming confidentiality. It is unclear how tribunals have addressed this matter, but it is certainly something for parties to consider early on when agreeing on confidentiality regimes.
ABOUT THE AUTHORS
Will Hooker is a Partner in Alston & Bird’s International Arbitration and Dispute Resolution Team in London. William Hooker focuses his practice on complex commercial and investment arbitrations. He regularly represents clients in arbitration matters under the rules of the ICC, LCIA, SIAC, LMAA, ICSID, LAMC, and UNCITRAL, as well as in ad hoc arbitrations. Will’s practice is global in scale, having represented clients on every continent.
Sophia Lekakis is a Senior Associate in Alston & Bird’s International Arbitration and Dispute Resolution Team in London. Sophia Lekakis focuses her practice on commercial and investment arbitration. She has represented clients under the LCIA, ICC, ICSID, and UNCITRAL rules.
*The views and opinions expressed by authors are theirs and do not necessarily reflect those of their organizations, employers, or Daily Jus, Jus Mundi, or Jus Connect.
