CHAPTER 4: KEY ISSUES REQUIRING CLARIFICATION |
120. In the previous Chapter we set out the identifying
features of the regulatory bodies and mechanisms that have been
set up following the adoption of the Royal Charter. We received
evidence about a number of issues surrounding the current system
of press regulation which are the subject of disagreement or confusion.
We examine these in this Chapter.
Crime and Courts Act 2013
121. As we highlighted in Chapter 3, the Government,
with cross-party consensus, put forward legislative measures to
accompany the Royal Charter, in order to encourage relevant publisher[s]
of news-related material to sign up to the system set out in the
122. The provisions in the Crime and Courts Act
2013 relating to publishers of news-related material:
"are designed to provide a system of financial
incentives for 'relevant publishers' to sign up to the new regime
in the Royal Charter. They do that by offering protection from
legal costs in certain civil litigation claims to those 'relevant
publishers' that do sign up to the new model (the carrot), and
making exemplary damages available in those claimsbeyond
ordinary compensatory damagesfor the courts to award as
a punitive measure against 'relevant publishers' who refuse to
sign up to the new framework (the stick)."
123. In the following paragraphs we consider
the evidence we received regarding the definition of relevant
publisher within the Crime and Courts Act 2013 and the system
of legal costs and exemplary damages contained therein.
124. The Leveson Report gave some guidance as
to which publishers should submit themselves to regulation. It
said the new system:
"must involve all the major players in the
industry, that is to say, all national newspaper publishers and
their online activities, and as many regional and local newspaper
publishers, and magazine publishers, as possible. This is not
meant to be prescriptive at the very small end of the market:
I would not necessarily expect very small publishers to join the
body, though it should be open to them to do so on appropriate
125. Section 41 of the Crime and Courts Act 2013
sets out the categories of relevant publisher[s] who are expected
to join the regulator.
126. There are four cumulative criteria which
must be met to satisfy the definition. To be considered a relevant
publisher, a person or organisation must:
news related material;
material in the course of a business (whether or not carried out
with a view to profit);
material written by different authors; and
material which is subject to editorial control (over the content
of material, presentation and the decision to publish).
127. There are, however, specific exemptions
for certain publisherssome by name, some by descriptionfrom
the operation of the system of financial incentives. These are
set out in Schedule 15 to the Act and include the BBC, public
bodies and charities, company news publications and scientific
or academic journals.
128. Dr David Wolfe QC, Chairman of
the Press Recognition Panel, told us that the definition was slightly
complicated but that, "it captures anybody who produces something
that has news content produced by different authors and there
is an editor. That can be online or newsprint".
129. Professor Chris Frost, Chair of the
Ethics Council, National Union of Journalists (NUJ), said that
it seemed to be a good working definition but that, "until
we start working with the system, it will be difficult to tell".
Dr Martin Moore, Director of the Media Standards Trust, said
that whilst "there are elements of it that are clear"
that there were parts of it which he found "ambiguous and
difficult to interpret."
130. English PEN, an organisation which promotes
freedom of expression and literature, published a Report in November
2014, entitled Who joins the regulator? A report on the impact
of the Crime and Courts Act on publishers.
The report claimed that:
analysis of a range of publications, according to the terms in
the legislation, indicated widespread inconsistency across the
media landscape regarding which publications are exempt and which
qualify for regulation.
that are expected to be exempt from regulation appeared to fall
into the category of relevant publisher, including campaigning
organisations, political parties and think tanks;
in the legislation were poorly defined, leading to uncertainty
for publishers and the risk of a chill on free speech; and
· a lack
of clarity in the legislation would result in anomalies within
categories of publication expected to be excluded from regulation,
including blogs and specialist publications.
131. We did not test these claims by seeking
a specific view on them from our witnesses and therefore have
not come to a conclusion on their accuracy. Nonetheless it appears
that, the term relevant publisher, as used in the Crime and Courts
Act 2013, is ambiguous.
EXEMPLARY DAMAGES AND COSTS
132. Section 34 of the Crime and Courts Act 2013
deals with awards of exemplary damages. Exemplary damages (sometimes
called punitive damages) are damages intended to reform or deter
the defendant and others from engaging in conduct similar to that
which formed the basis of the lawsuit, rather than simply reflecting
the loss suffered by the claimant.
133. Sub-section 61(7) of the Crime and Courts
Act 2013 states that:
"sections 34 to 39 come into force at the
end of the period of one year beginning with the day on which
a body is established by Royal Charter with the purpose of carrying
on activities relating to the recognition of independent regulators
of relevant publishers (as defined by section 41)."
134. The provisions relating to exemplary damages
come into force on 3 November 2015 (the anniversary of the establishment
of the Press Recognition Panel) whether or not a regulator has
been approved by the Recognition Panel. Sub-section 35(3)(a) of
the Crime and Courts Act 2013 is concerned with whether it is
appropriate for exemplary damages to be awarded. It provides that
the court must take into account "whether membership of an
approved regulator was available to the defendant at the material
time". This might therefore provide a defence against the
awards of exemplary damages under section 34 if no regulator has
been approved by the Recognition Panel at the material time.
135. Section 40 of the Crime and Courts Act 2013
deals with the award of costs. Sub-section 1 provides that the
section applies when a relevant claim is made against a publisher
relating to the publication of news-related material. Sub-sections
40 (2) and (3) set out considerations the court must take into
account when deciding whether to award costs against the defendant
If the defendant was a member of an approved regulator at the
material time (or was unable to be a member) then the court must
not award costs against the defendant unless certain circumstances
pertain (set out in section 40). If the defendant was not a member
of an approved regulator at the material time (but was able to
be a member) then the court must award costs against the defendant
unless certain circumstances pertain (set out in section 40).
136. Sub-section 40 (6) states that, "This
section does not apply until such time as a body is first recognised
as an approved regulator."
137. The provisions on costs do not therefore
come into force on a particular date. They come into force only
once a regulator (whose membership includes a relevant publisher
as set out in section 41 of the Crime and Courts Act 2013) is
approved by the Press Recognition Panel.
138. Hugh Tomlinson QC, media law expert
and Chair of the board of Hacked Off, a campaign group for victims
of press intrusion, told us that this system was: "potentially
effective. Of course, if a newspaper wants to take the costs hit
and stay outside the system it could do thatbut if those
incentives are in place, once an independent regulator is set
up, it is potentially effective."
139. Dr Moore was more sceptical about the
likely effectiveness of this system:
"[I]t is very hard to judge the degree to
which there will be financial incentives. We know from what many
publishers have said that the reasons for not signing up to the
charter are not simply financial. Some of them are ideological
went back and tried to do an evaluation of the potential savings
that publishers would make or not make, which is extremely difficult
to do. It is very rare that publishers are subject to legal action
on a regular basis and particularly legal action by large corporations
so you cannot figure on an annual basis how
much you are likely to save or not save."
140. Mr Rusbridger, Editor of The Guardian,
explained that there was uncertainty about how the system would
work. He said, "A large part of it is at the discretion of
the courts, and the carrots [the incentives] seem to favour claimants
more than defendants
The media lawyers feel that they were
not given a chance to advise. The carrots that Leveson imagined
were better than the carrots that we have ended up with."
141. Sir Alan Moses, Chairman of the Independent
Press Standards Organisation (IPSO), said "I am reluctant
to get into the legal complexities. I do not think they are clear.
It will take some considerable time to see whether they will work
as a carrot and stick, as they were designed to work
effectiveness is not clear"
142. It has been claimed by industry lawyers
that the provisions of the Crime and Courts Act 2013 relating
to exemplary damages potentially constitute a breach of Article
10 of the European Convention of Human Rights.
143. We asked Dr Wolfe QC whether this
issue might form the object of complaints to the European Court
of Human Rights. He said that this would "no doubt be an
issue in any litigation in which exemplary damages were awarded
following November 2015. You can have a lawyer's view on whether
a claim to the European Court would succeed, but that is not the
role of the panel to provide that sort of thing."
144. In a recent blog, Gill Phillips, the Director
of Editorial Legal Services for The Guardian, wrote: "What
is regarded as particularly objectionable is the fact that [the
provisions on exemplary damages] single out for punishment a particular
category of defendant, rather than a particular kind of conduct,
all the more so where the category of defendant singled out includes
145. Similarly, Bob Satchwell, Executive Director
of the Society of Editors, told us:
"I thought that we were all supposed to
be equal under the law but this would create an unequal legal
regime. People who for whatever reason had not joined the approved
regulator would be treated differently; they could commit the
same 'offence', as it were, and it would cost an awful lot more."
146. Mr Tomlinson QC refuted claims
that the system might be unlawful. He said:
"I have absolutely no doubt that they are
lawful. The exemplary damages provisions were designed by the
Law Commission in effect to be compliant with Article 10, and
are very carefully calibrated. I have no doubt either that the
costs provisions, and that kind of incentive, are the proper way
in which to encourage people to subject themselves to regulation."
147. Arbitration is a form of alternative dispute
resolution (ADR). It is a method for the resolution of disputes
outside the courts. Arbitration generally works by the parties
involved in a dispute referring it to arbitration by one or more
persons and agreeing to be bound by the arbitration decision (the
"award"). A third party reviews the evidence in the
case and imposes a decision on both sides.
148. A central theme of the Leveson Report was
the importance of access to justice. The report proposed that
any new regulator should establish an arbitration scheme, which
would give all claimants, whatever their financial means, a route
to pursue claims against the press:
"The need for incentives, however, coupled
with the equally important imperative of providing an improved
route to justice for individuals, has led me to recommend the
provision of an arbitration service that is recognised and could
be taken into account by the courts as an essential component
of the system, not
simply something that could be added
at a later date."
149. Arbitration is often favoured over court
proceedings because it is generally quicker and costs less. Mr Tomlinson QC
explained: "lawyers are ridiculously expensive and litigation
takes a long time
Leveson's idea was to have a system of
arbitration that could be cheaper, quicker and more effective
and would help both victims and poor publishers."
150. The regulator's provision of an arbitration
scheme is key to publishers being able to take advantage of the
potential protections against the award of exemplary damages and/or
costs. Jonathan Heawood, Founding Director of The Independent
Monitor for the Press (IMPRESS) project, explained the advantages
of an arbitration scheme:
"It would largely come down to mitigating
the risk of costs awards in libel or privacy actions. If a relevant
publisher was regulated
[by] an approved regulator, and
one of those publishers was sued
and they found themselves
in court, having offered the litigant the opportunity to go to
arbitration and the litigant having refused that opportunity
the court would be expected to rule against the claimant on costs.
In other words, the defendant, the publisher or the newspaper
would be protected. They would be immune from paying the other
side's costs even if they lost a libel or privacy action, which
is clearly a considerable financial incentive and should remove
a huge part of the chilling effect of the current costs regime
151. As we mentioned in Chapter 3, IMPRESS plans
to offer an arbitration scheme to its members
and IPSO is carrying out work to see how an arbitration scheme
152. There are other companies which are planning
to provide this service. We received evidence from Early Resolution
CIC, a not-for-profit company established to assist litigants
in media cases. Early Resolution CIC said it hopes its "Pilot
Arbitration Service will effectively be 'Recognition Ready', so
that any Regulatory Body which takes it on will know that it is
workable and Leveson compliant
153. Other witnesses were less convinced that
arbitration was the best means of offering cheap redress. Professor Frost
told us that the regional press were concerned that, "an
arbitration system, as suggested by Leveson, would be very expensive
for them because they would end up funding a system that would
spend most of its time, effort and energy looking at claims that
have gone to the national newspapers."
Similarly, Mr Satchwell explained that, "if you have
a compulsory arbitration system, it may not sound that expensive
but it would be an extra cost to them [the local press]
They are looking at very tight, relatively small budgets where
the slightest hiccup could make the difference between a paper
living and dying."
Impact of multiplicity of regulators
154. As outlined in Chapter 3, there are currently
two major press regulators in existence: IPSO which has 69 publishers
as members, and IMPRESS which as yet has no members. The Guardian,
the Financial Times and The Independent are the only national
daily newspapers which have not signed up to IPSO and instead
offer their own, internal system of regulation (see paragraphs
155. One of the questions that we set out to
answer at the start of this inquiry was the likely effect of more
than one regulator on the consumer and on the industry.
156. Sir Alan said that the existence of
more than one regulator was "highly confusing to those who
matter most: namely, the public."
Mr Rusbridger told us that it would be better for the "press
all to be together in one body."
157. Dr Moore, whilst acknowledging that
there were potential disadvantages of having more than one regulator,
thought there were benefits, "particularly in a digital environment"
to allowing for a multiplicity of regulators.
158. Perhaps unsurprisingly, Mr Heawood, the
Founding Director of IMPRESS, (the second press regulator to come
into existence after the Royal Charter) pointed out that in other
countries there were multiple regulators and so the current system
in the UK was not entirely unheard of. He explained that:
"As a member of the public with a problem
with a newspaper or website, the first thing you would be doing
would be going to that publisher, and they should have in place
a system. You should not at that point be worrying too much about
who is the next stop regulator."
Professor Frost told us that there were "good
reasons for having more than one regulator."
In its written evidence the NUJ supplied us with figures which
showed that the vast majority of the complaints dealt with by
the PCC had been against national daily newspapers. The NUJ explained
that having more than one regulator would be:
"a good solution for the provincial press
who do not want a regulator with an arbitrator they would be obliged
to share with the national press. They clearly fear that the burden
of funding such an arbitrator that would largely be there to limit
civil actions taken against national newspapers would be excessive.
The same is also true of normal complaints."
159. In the executive summary to his report,
Lord Justice Leveson wrote:
"I was struck by the evidence of journalists
who felt that they might be put under pressure to do things that
were unethical or against the code. I therefore suggest that the
new independent self-regulatory body should establish a whistle-blowing
160. Professor Frost explained that the
NUJ welcomed this recommendation "so that journalists could
say when they believed that something breached the code of practice
and that therefore they did not want to do it."
161. Mr Tomlinson QC told us that "IPSO
is supposed to have a hotline, but it does not. It says in its
founding documents that it will have one, but it does not."
Dr Evan Harris, Associate Director of Hacked Off, said that
setting up a hotline service was not difficult: "You can
buy a hotline service from Public Concern at Work
Yet four months after IPSO was formed, a journalist whom I spoke
to yesterday said that he tried to get confidential advice from
IPSO and that there was no one there who could provide that".
162. We asked Mr Vickers, Chairman of the
Regulatory Funding Company (RFC) which funds IPSO, why this hotline
had not been set up. He said, "It should be there
If I have the right to be cross, I am very cross that that is
I do not know why it is not."
He told us that its non-existence was not as a result of the constraint
of the financial arrangements.
163. IPSO has since set-up a whistle-blowing
hotline, to which there is a link on its website.
Ownership of the Editors' Code
164. As we explained in Chapter 3, paragraphs
89-92, the Editors' Code of Practice
is a set of standards used by IPSO to regulate the industry. It
is also used by The Guardian. It is based largely on the Code
of Practice which was enforced by the now defunct PCC. It was
framed by the Editors' Code of Practice Committee and is enshrined
in the contractual agreement between IPSO and its member publishers.
165. The Leveson Report said that the principles
under which the press industry should operate were "to a
large degree reflected in the Editors' Code of Practice."
Mr Tee, Chief Executive of IPSO, told us that, "the
Editors' Code is generally felt to be fit for the purpose that
we use it for. Even critics of IPSO, I think, would say that the
Editors' Code was a pretty good code for the things that we might
judge complaints against." 
166. We were surprised to learn from IMPRESS
and IPSO that the Editors' Code had been copyrighted by the RFC
and that IPSO did not have authority over it. 
167. Mr Vickers told us that, "The
Code Committee was convened by the Regulatory Funding Companythat
has been our last involvement in itand we own the copyright
on the code."
168. He said that the RFC had already "licensed"
the Code to the Financial Times "on the strict terms that
if they want to use the code, they use the code as its stands".
Mr Vickers told us that the RFC had not been asked to share
the Code with other regulators and that it would not be his decision
whether to allow them to use it, but that the RFC would "consider"
doing so. He explained that they would "question why, if
people were so keen on the code, they did not join IPSO. It is
not something that we currently propose to use as some sort of
weapon or tool."
162 Charlie Potter, 'Press regulation: all you need
to know', British Journalism Review, vol. 24, no. 32, (2013):
http://www.bjr.org.uk/data/2013/no2_potter [accessed 10 March
The Leveson Report, Volume IV, Part K, Chapter 7, Para 4.11 (2012):
[accessed 6 February 2012] Back
Crime and Courts Act 2013, Schedule 15 Back
English PEN, Who joins the regulator? A report on the impact
of the Crime and Courts Act on publishers (November 2014):
[accessed 3 February 2015] Back
Ibid., p 3 Back
Crime and Courts Act 2013, sub-section 61 (7) Back
Crime and Courts Act 2013, section 40 Back
Crime and Courts Act 2013, sub-section 40(6) Back
'Tory and Leveson plans for exemplary privacy damages may be unlawful',
The Guardian (21 February 2013): http://www.theguardian.com/media/2013/feb/21/tory-leveson-exemplary-privacy-damages
[accessed 11 February 2015] Back
The International Forum for Responsible Media Blog, Gill Phillips,
'Briefing Note on Exemplary Damages and Costs': https://inforrm.wordpress.com/2013/03/22/briefing-note-on-exemplary-damages-and-costs-gill-phillips
[accessed 3 February 2015] Back
The Leveson Inquiry, Executive Summary, op. cit. paragraph
Written evidence from Early Resolution CIC (PRG0015) Back
Written evidence from the National Union of Journalists (PRG0002) Back
The Leveson Inquiry, Executive Summary, op. cit. paragraph
Independent Press Standards Organisation, 'Editors' Code of Practice':
IPSO/cop.html [accessed 4 February 2015] Back
The Leveson Inquiry, Executive Summary, op. cit., paragraph