‘After The Event’ Insurance: What price freedom of expression?
25/11/2024
The European Court of Human Rights in Strasbourg might seem to be a distant, remote, and even irrelevant, institution to hard-pressed journalists across the UK, but a recent decision from that Court shows how influential it is, or in this instance, could have been.
Last week, the Strasbourg Court delivered its judgment in the case of Associated Newspapers v United Kingdom. According to reports, the decision was simultaneously a reassuring success which enhances freedom of expression by reducing the cost of litigation, and a disappointing lost opportunity to enhance freedom of expression - by reducing the cost of litigation.
But before exploring the judgment, here’s a quick canter through some relevant background details.
First, when ‘no win no fee’ agreements were first introduced, Claimant’s lawyers were permitted to charge an uplift to their fees of up to 100% if they were successful, as a reward for taking the risk of not getting paid if the case was lost (known as a success fee).
People like me were much opposed to success fees, and I for one was very happy when they were prohibited in 2019 from being used in future media law cases.
Second, litigation is a risky business, and people suing publishers under ‘no win no fee’ agreements wanted protection in case they lost and were ordered to pay a publisher’s costs. The insurance industry responded by providing After The Event insurance policies (“ATE”). ATE policies are still available despite the abolition of success fees. The premiums, which are hefty, can be recovered as part of the Claimant’s legal costs.
So, back to Strasbourg.
Associated, as publisher of the Daily Mail, had been sued by a Mr. Sicri and a Ms. Hanson. They lost the Sicri case after a trial, and settled the Hanson claim. In the former, they were ordered to pay the Claimant’s costs; and in the latter, they agreed to pay her costs.
Mr. Sicri’s costs included a claim for a success fee of £245,775, and because his case preceded the abolition of success fees, it was very much a live issue for Associated. The Court ruled in its favour, and held that the success fee was excessive and infringed the Mail’s Article 10 rights to freedom of expression.
As I say, an important issue to Associated but of no consequence to those dealing with libel claims brought after 2019.
Meanwhile, Ms. Hanson’s claim for costs included an ATE premium of £335,160. As this is a issue which still affects all publishers, this part of the decision is far more interesting, relevant, and concerning.
Associated argued that the obligation to pay the ATE premium imposed a costs burden which was excessive and “was plainly capable of discouraging the participation of the press in debates over matters of legitimate concern”. Therefore, it was argued, this obligation infringed the publisher’s Article 10 rights.
The panel of seven judges disagreed. They ruled that the obligation to pay the ATE premium was not disproportionate, on the basis that had the publisher won in the original case and a costs order had been made in its favour, the ATE policy would have served its interests by underwriting the Claimant’s costs exposure.
We do not agree with this analysis. However, that hardly matters; the recoverability of the ATE premium remains in place, and publishers (and their lawyers) have to accept the situation and deal with it.
And if you are still thinking that this is an issue which only affects the nationals and has nothing to do with the regional press, think again.
The financial risk attached to the ATE premium plays out repeatedly when publishers, whether micro, small, medium, or large, have to assess whether or not to defend a claim. Whatever the legal merits, the money implications simply cannot be ignored.
The situation is not helped by the Courts in England and Wales, which refuse both to consider reducing the recoverable portion of an ATE premium, and to rule that the premium is not recoverable at all.
For example, not so long ago, we acted for a regional publisher in a small-ish libel claim, and despite settling it early, the claim for costs included an ATE premium well in excess of £100k.
It’s this kind of money which editors and managers have to consider when deciding whether to risk fighting a claim, or to take a commercial position from the outset and settle at the earliest opportunity to avoid the costs risk in general, and the ATE risk in particular.
The ECtHR could have levelled the playing field by declaring that ATE premiums are not a recoverable element of a successful party’s costs. In declining to do so, it’s fair to ask: what price freedom of expression now?