[icernet] On-Line Defamation

[Arul Selvan MIC]

ARTICLE FOR THE NEW YORK TIMES:
DOW JONES v GUTNICK

An Australian court ruling will have widespread implications for online
publishing, writes Matt Collins.*

In October 2000, Barrons magazine and its online cousin, Barrons Online,
published a scathing 7,000 word article about Australian businessman Mr
Joseph Gutnick. It traversed a range of issues, accusing Mr Gutnick of
exploiting religious charities in the United States, of involvement in share
manipulation and tax evasion, and of improper dealings with a gaoled tax
evader and money launderer, Mr Nachum Goldberg. Mr Gutnick brought
defamation proceedings against the American publisher of Barrons and Barrons
Online, Dow Jones, in the Supreme Court of his home State, Victoria,
Australia.

Mr Gutnick's case has not yet reached a hearing on the merits. We do not
know whether Dow Jones believes it was justified in publishing the article.
We do not know what steps the journalist, editor and publisher took before
making the decision to go to press. The case has been mired since its
inception in arguments about jurisdiction: should an American publisher be
held to account in a Victorian court according to Australian law? Or should
Mr Gutnick have to bring his proceedings in the courts of New York, where
Dow Jones is based, or New Jersey, where its web servers are located? More
fundamentally, does the First Amendment to the US Constitution have
extraterritorial reach: should Americans have the benefit of the First
Amendment when they publish material about foreigners which is accessible
outside the US, or must they have regard to the vastly different legal
standards which prevail in other countries in relation to freedom of speech?

The trial judge, Justice John Hedigan of the Victorian Supreme Court, saw
the issue as simple and uncontroversial: Mr Gutnick is a prominent
Victorian, with a business and personal reputation there which he is
entitled to protect. Dow Jones elected to publish an article about Mr
Gutnick, knowing each of those matters. It was not unfair, so Hedigan J
concluded, for Dow Jones to be held to account in Victoria according to
Australian standards of what constitutes defamation. No question of conflict
between Australian standards and US standards arose.

On appeal to the High Court, Australia's ultimate appellate court, this case
attracted a great deal of international interest. International media
outlets, including The New York Times, CNN, Bloomberg, Reuters and The Wall
Street Journal intervened in the case, arguing that the jurisdictional issue
had serious international implications. Hedigan J's ruling, they argued,
would mean that international publishers would have to restrict the
availability of material online in Australia, to avoid the risk of being
sued in Australian courts. Worse still, Hedigan J's ruling meant that
publishers could potentially be sued in the courts of hundreds of countries,
making it all but impossible to protect against liability. The ruling, if
upheld, would have a 'chilling effect' on freedom of speech.

The Australian High Court unanimously ruled on 10 December in Mr Gutnick's
favour. He may proceed with his defamation action against Dow Jones in the
Supreme Court of Victoria, and have liability assessed according to
Australian standards of what constitutes defamation. Dow Jones will not be
entitled to rely on the First Amendment to avoid liability in relation to
damage caused by persons reading the article in question in Victoria.

What is perhaps most striking about the judgments of the members of the High
Court is the extent to which they rejected arguments about the
revolutionary nature of the Internet. As four of the judges observed: 'the
problem of widely disseminated communications is much older than the
Internet and the World Wide Web. The law has had to grapple with such cases
ever since newspapers and magazines came to be distributed to large numbers
of people over wide geographic areas.'

The dire warnings of the major media outlets received short shrift from the
High Court. The majority judges again: 'the spectre which Dow Jones sought
to conjure up in the present appeal, of a publisher forced to consider every
article it publishes on the World Wide Web against the defamation laws of
every country from Afghanistan to Zimbabwe is seen to be unreal when it is
recalled that in all except the most unusual of cases, identifying the
person about whom material is to be published will readily identify the
defamation law to which that person may resort.'

Only one judge, Justice Michael Kirby, expressed any reservations about the
outcome of the case, noting that it was 'a result contrary to intuition' and
that national legislative attention and international discussion might be
required. In the end, though, even Kirby J upheld Hedigan J's ruling.

The High Court's decision will receive close attention worldwide because it
is the first time an ultimate appellate court has ruled on the question of
jurisdiction for defamatory online material. It would be surprising if
courts in England, Canada and New Zealand, among others, did not treat the
decision as being highly persuasive. As a matter of the application of legal
principle, the ruling is unexceptional. It is consistent with decisions of
lower courts in countries including the United States, England, France and
Canada.

The case will, however, have widespread implications, not all of which were
considered by the court. To avoid the risk of being sued in foreign
countries - including many with laws much less benign than Australia -
Americans wishing to publish material critical of foreigners must consider
the law of each place where the foreigner might have a substantial
reputation. In practice, to minimize the risks, American publishers will
have to seek foreign legal advice and water down the content of their
writings. Publishers may decide not to publish risky articles at all, not
publish them online, or try to restrict foreigners from having access to
their sites. On any scenario, freedom of speech will be chilled, and the
public deprived of information.

Dr Matt Collins is a barrister in Melbourne, Australia and the author of The
Law of Defamation and the Internet (Oxford University Press, 2001). E-mail:
matt.collins at vicbar.com.au

The text of the High Court judgment can be found at
http://www.austlii.edu.au/au/cases/cth/high_ct/2002/56.html