A holiday no foreign newspaper would take here

No-win, no-fee cases can cost up to 10 times the cost of damages for defendants

PITY the poor American caught in our judicial system. Not likely to elicit much sympathy at a time when the vast majority of people in the UK are opposed to the extradition and vastly disproportionate fate awaiting Scottish systems administrator Gary McKinnon, wanted in the US on charges of hacking into military and Nasa computers.

If he is sent to the US, which now hangs in the balance since Home Secretary Alan Johnson said he would “stop the clock” on legal proceedings in order to study new medical evidence owing to McKinnon’s state of mind, he could spend up to 10 years in jail.

Rachel Ehrenfeld’s sentence may be comparatively less severe, but it is perhaps just as harsh, if not downright perplexing to anyone with a sense of fair play. Ehrenfeld, a scholar at New York University School of Law and Colombia University, edits the Terror Finance Blog, is widely published in newspapers including the Wall Street Journal, and also works as a commentator for networks such as CNN and NBC.

As might be discerned from the title of her blog, she specialises in the funding of extremism (particularly of the Islamist variety) and in 2003 she published a book called Funding Evil: How Terrorism Is Financed – and How to Stop it. In it, she alleged that Saudi-born and Ireland-based investment banker Khalid bin Mahfouz – one of the world’s richest men with an estimated personal fortune of $3.2bn – had, along with his two sons, used the National Commercial Bank of Saudi Arabia and Islamic charities to channel funding to al-Qaeda.

Mahfouz, outraged at the suggestion that he supported terrorism, promptly sued. But the way he went about it has since prompted the American government into drafting a law that will prevent any US national having to pay regard to a successful prosecution for defamation outside of its borders, while Justice Secretary Jack Straw said he is prepared to instigate wholesale reform of the UK’s libel law system to prevent cases like Mahfouz’s being heard in Britain again.

The Saudi took his case against Ehrenfeld to the High Court in London and, when she failed to show (“The book has nothing to do with England, I have nothing to do with England”), damages and costs totalling £110,000 were awarded against the academic. Defamation laws are there to protect individuals who have suffered financially (and sometimes emotionally) as a consequence of an untruthful allegation against their good character. What made this case so remarkable is that Ehrenfeld had only sold 23 copies of her book in the UK, together with a chapter published on a British website.

It was not only in the land of the free speech that there was great surprise. Mr Justice Eady, who heard the Mahfouz case, waved away questions over his ruling, adding: “The truth is that, these days, people do not normally bring libel actions to make money. After a contested trial, you would be extremely lucky to make a profit after a detailed assessment of costs. If you are accused of murder, terrorism, corruption or child abuse, you are entitled to a fair hearing before an unbiased tribunal.”

Mahfouz’s lawyers were arguing something similar when they accused Ehrenfeld of using “this case and her legal conflict with Mr bin Mahfouz to promote a new edition of her book as ‘the book the Saudis don’t want you to read’, to present herself as a victim of repressive English law, and to further publicise her false claim that Mr bin Mahfouz is a supporter of terrorism”.

Not that it appears to have deterred Mahfouz. Since the attacks on September 11, 2001, he has either successfully used or threatened to use the English courts on 29 occasions against similar claims. And he is not alone. The number of defamation cases heard in the high court here rose by 11% in 2008 to a four-year high with some 259 writs – many of them from abroad, suing foreign-based media operations with limited or no reach in the UK. The largest jump, according to English publishing house Sweet & Maxwell, was caused by people alleged to be involved with terrorism, with the number of cases heard in England almost tripling between 2006 and 2007.

There is the case of “a Ukrainian who was attacked in a Ukrainian newspaper in Ukrainian in the Ukraine”, according to the Financial Times, who is suing for libel in London. The oligarch (and political refugee) Boris Berezovsky has successfully sued the New York-based Forbes Magazine here. Not that Americans aren’t above using our libel laws to their own end. Bush Neocon Richard Perle threatened investigative reporter Seymour Hersh with legal action in this country after Hersh wrote a series of unfavourable features about him.

In fact, American libel tourism first began with Arnold Schwarzenegger in 1990, when he issued proceedings against the Florida-based author Wendy Leigh over an unauthorised biography. The Miami-based National Enquirer lost a case brought by Cameron Diaz here. Even more incredibly, the High Court seems prepared to accommodate litigants who have broken the law elsewhere while seeking redress here. Roman Polanski was able to sue Vanity Fair, even though he remains a fugitive from the law in the country where it is published. In a moment of supreme hypocrisy, he was allowed to give evidence by video link from Paris to avoid the extradition treaty that has trapped McKinnon.

But when Peter Wilmshurst, a consultant cardiologist at the Royal Shrewsbury Hospital, called into question the effectiveness of a new heart implant device developed by NMT Medical, an American company, he found himself facing defamation proceedings in his home country. His remarks were posted on a US website, but he is being pursued in the High Court over the number of cardiologists that read the article in the UK. He told The Times that he was prepared to lose his house to set precedent and shield professionals like him from “legal bullying”.

Now some of the world’s best known known titles, such as The New York Times, The Washington Post and The Boston Globe have warned that they may follow the Wall Street Journal in ending sales of their titles in the UK to avoid because of the risk of being sued. A memorandum to a Commons select committee looking into the matter earlier this year found: “Leading US newspapers are actively considering abandoning the supply of the 200-odd copies they make available for sale in London. They do not make profits out of these minimal and casual sales and they can no longer risk losing millions of dollars in a libel action which they would never face under US law.”

British publishers has already gone that way, with an unauthorized biography of Tom Cruise written by Princess Diana profiler Andrew Morton unavailable for sale here because of legal fears.

It was prominent QC Geoffrey Robertson, who first came up with the term ‘libel tourism’ to describe the filing of suits in countries where judicial system is more likely to rule in favour of the plaintiff. But it is another country that has taken action against libel tourism first.

Spurred by the Ehrenfeld case, the New York State Legislature last year passed the seemingly-misnamed Libel Terrorism Protection Act, which enables “New York courts to assert jurisdiction over anyone who obtains a foreign libel judgment against a New York publisher or writer, and limit enforcement to those judgments that satisfy the freedom of speech and press protections guaranteed by both the United States and New York Constitutions”. Meanwhile – irony of ironies – Californian governor Schwarzenegger has recently passed laws that prevent celebrities and other well-to-dos from travelling to Britain to sue American-based publications.

Now the US Senate is considering The Free Speech Protection Act, which would prevent American courts from enforcing libel judgments issued abroad against any US citizen if their words were not considered defamatory under US law. If it passes into statute, the act would also allow US publishers and authors to counter-sue – up to three times the amount of damages awarded abroad – if such a suit was considered as part of an attempt to suppress free speech rights.

Spurred on by campaigns in newspapers like The Sunday Times, Jack Straw said last month that he was wants to see new restrictions on conditional fee agreements as well as a ceiling on legal fees for such cases, citing the example of a regional newspaper that paid £5,000 damages to a plaintiff but £50,000 to his lawyer. “The very high levels of remuneration for defamation lawyers in Britain seem to be incentivising libel tourism,” he added.

The Justice Secretary has been following research from the Index on Censorship and English PEN, a charity that backs persecuted writers, which recommends apology as the chief redress and damages for defamation limited to £10,000 a case. Their year-long inquiry found that the UK’s current libel system could turn the country into a “global pariah” if the burden of proof is not shifted so that claimants must demonstrate damage, and so cases are prevented from being heard in London if less than 10% of the defendant’s circulation is based in the UK. Straw says he is now considering a new libel bill.

Away from the high profile cases, there is a dark side to the legal status quo. Increasingly, NGOs being dragged into court in an attempt to gag them. Human Rights Watch was compelled to change a report about the genocide in Rwanda after a man it accused of being a war criminal threatened action in British courts. Meanwhile, fellow campaigning organisation Global Witness was taken to court when it proved that the son of Congolese despot Denis Sassou Nguesso had gone on a quarter-million-dollar spending spree with a credit card paid for by his impoverished nation’s public funds (more details in the comment below).

Nevertheless, British courts have occasionally refused to entertain the absurd. The Daily Telegraph walked free after its Mandrake diary column quoted Petra Ecclestone as saying: “I am not a veggie and I don’t have much time for people like the McCartneys and Annie Lennox”. She duly claimed hurt, adding that it meant: “I was disrespectful and dismissive of the McCartneys and Annie Lennox to the point of being willing to disparage them publicly for promoting vegetarianism.” Mrs Justice Sharp ruled that “right-thinking members of society” would think no less of the fashion designer for saying what she did.