New reforms to address SLAPPs in economic crime proceedings have moved one step closer after the Economic Crime and Corporate Transparency Act 2023 received Royal Assent on the 26th October 2023.
We looked at the proposed amendments in our previous article. In this update we take a closer look at the new reforms and what questions still remain unanswered.
What is a SLAPP?
A "SLAPP" stands for Strategic Litigation Against Public Participation. SLAPP claims are most commonly associated with media law claims, particularly defamation as well as data protection and privacy, and can be brought by both corporations and individuals.
The new Act will introduce extensive reforms in corporate and economic crime related areas. Sections 194 and 195 of the Act set out the SLAPPs reforms in the context of economic crime proceedings. They include the first legal definition of a SLAPP and introduce an early dismissal mechanism.
Under the Act, a claim is a "SLAPP claim" if:
- the claimant’s behaviour in relation to the matters complained of has, or is intended to have, the effect of restraining the defendant’s exercise of the right to freedom of speech;
- any of the information that is, or would be, disclosed by the exercise of that right has to do with economic crime;
- any part of that disclosure is, or would be, made for a purpose related to the public interest in combating economic crime; and
- any of the behaviour of the claimant in relation to the matters complained of is intended to cause the defendant:
i) harassment, alarm or distress,
ii) expense, or
iii) any other harm or inconvenience, beyond that ordinarily encountered in the course of properly conducted litigation.
What information relates to economic crime?
The information that the claimant's behaviour is preventing, or is intending to prevent, from disclosure will be deemed "to do with economic crime" if:
- it relates to behaviour or circumstances which the defendant reasonably believes to be evidence of the commission of an economic crime; or
- the defendant suspects that an economic crime may have occurred and believes that the disclosure of the information would facilitate an investigation into whether such a crime has
The categories of "economic crime" are set out in section 193 and Schedule 11 of the Act and include a broad range of common law and statutory offences.
The new reforms raise questions as to how the defendant's reasonable belief and/or reasons to suspect will be assessed by the court, particularly if the early dismissal mechanism is being applied at an early stage in the proceedings for example before a defence has been filed or disclosure provided.
How will the claimant's behaviour be assessed?
As set out above, the claimant's behaviour will be taken into account by the Court. The Act includes some guidance as to what behaviour may fall into the fourth limb of the test for example whether the costs incurred are disproportionate to the remedy sought, whether the defendant has access to fewer resources to defend the claim than another person against whom the claimant could have brought proceedings, and any failure by the claimant to comply with a pre-action protocol or the Civil Procedure Rules.
These failures are very broadly categorised and include but are not limited to issues such as the choice of jurisdiction, the use of dilatory strategies and the nature of and amount of disclosure sought by the claimant. This suggests that the claimant's behaviour throughout the course of the litigation will be scrutinised and suggests that a claim could become a SLAPP if the claimant's behaviour at a later stage in the litigation goes beyond that encountered in the course of properly conducted litigation.
There are practical issues in relation to establishing whether litigation has been conducted improperly, and the current lack of clarity around what the threshold will be means that this may become a hard-fought area potentially involving satellite litigation between claimants and defendants.
If a claim is held to be a SLAPP will it be struck out?
The Court may strike out a claim if it determines that it is a SLAPP claim and if the claimant has failed to show that it is more likely than not that the claim would succeed at trial. New Civil Procedure Rules are to be introduced to determine amongst other issues the extent to which the Court will be permitted to determine matters of fact by way of presumption.
This early dismissal mechanism differs from the existing strike out provisions in CPR Part 3 but we will have to wait for the new rules to fully assess the position.
What about costs?
If a claimant is able to show that it is more likely than not that its claim would succeed at trial the claim will be allowed to proceed but new rules are to be introduced providing that the Court may not order a defendant to pay the claimant's costs except where, in the court's view, misconduct by the defendant in relation to the claim justifies such an order.
The costs of defamation claims frequently exceed any damages awarded and so this new measure will address the disparity of resources between the parties, however, it remains to be seen whether it will act as a deterrent to well-resourced claimants.
When are the new SLAPPs reforms coming into effect?
There is currently no confirmed timescale but the Civil Procedure Rules Committee considered the implications of the Act last month and a sub-committee has been formed to analyse the options. Given the current political focus on SLAPPs the new rules are likely to be introduced in 2024.
If you would like some further detail on the application of the Act then please see the alert issued by DACB colleagues.
