DowJonesDownUnder

30 January 2002

Edward Alder

Several weeks ago Australia’s top court gave a preliminary ruling in Gutnick v Dow Jones & Others. Within hours news feeds were buzzing and journalists were predicting the end of a free press as Western countries know it.

On one level the fuss was understandable. For the first time the highest court of a leading jurisdiction had ruled on the thorny issue of where a media organisation can be sued for alleged defamation in a news item uploaded to a server in one country and read in another.

Joe Gutnick has sued Dow Jones over an article in Barrons magazine. The online version was on available on the predominantly US-oriented Wall Street Journal web site www.wsj.com, one of the few sites that has made a success of charging readers for access to news material. The site attracts a small number of paying subscribers in Australia. The print version had a circulation of 300,000 odd in the US. Mr Gutnick is Australian, resides in Australia and is well known in Australian business circles. He does, however, also keep a home in the US and has business interests there.

Mr Gutnick alleges that the article tarnished his Australian reputation and in his action he seeks damages to compensate him for that harm. Dow Jones, presumably, take a more cynical view of his motives. They say the US defamation, if there was one, was far more significant that any Australian one.

Those familiar with the defamation game may well speculate that Mr Gutnick is really suing to score points against the company in the US, but simply prefers 'pro plaintiff' Australian defamation law to US defamation law where the constitutional right to free speech makes it difficult for publicly known figures to succeed in libel actions.

The media certainly took the case seriously. Dow Jones wheeled out leading London media lawyer Geoffrey Robertson QC who has recently been seen doing battle against our own Immigration Department here in Hong Kong. A number of other media organisations, including Amazon, were permitted to intervene in the case and file submissions regarding the direction the court should take on the important issues raised.

At present it is the law that an act of defamation is regarded as committed in the place, rather crudely put, where the publication comes to the attention of the reader, viewer or listener. This means that traditional publishers and broadcasters are at risk of being sued not in the place where they produce or print their material, but in the places at which they put it into circulation or broadcast it.

In Gutnick the media organisations argued that in the Internet era the law, both procedural and substantive, should have the result that where a news item is uploaded to a web server, anyone wishing to sue the publisher for defamation should only be able to do so in the place where the web server is located, or possibly where the publisher principally does business (unless that place is chosen for “opportunistic” reasons), rather than the places where the item is read on a PC screen.

The media’s point was this: if the traditional rule is applied to Internet defamation then the media will be placed in an intolerable position. They would face the unmanageable business risk of being sued in respect of worldwide publications in various places with very strict defamation law, or worse, being sued in multiple jurisdictions from Afghanistan to Zimbabwe simultaneously.

They say that the Internet is different from anything that has gone before. Whereas with print or broadcasting the publisher can control the dissemination of its content, and thus decide in which jurisdictions it wants to run the gauntlet of defamation law, posting a news item on a web server amounts to publishing it everywhere. They say the policy of the law should encourage the development of the media, not cripple it by exposing it to impossible business risk, and therefore new defamation rules should be developed specially for the Internet.

Mr Gutnick is suing in Australia in respect of what he says is a libel committed in Australia, and harm done in Australia, to an Australian reputation. If that were correct, then in those circumstances under the local Australian procedural legislation the court would clearly have jurisdiction to hear the case. The position would be the same in Hong Kong.

But Dow Jones disputed that that was, or should be, correct. They argued that the court should take the opportunity to develop a “country of origin” rule under which material should be regarded as “published” on the World Wide Web when it is uploaded to the web server and becomes available for download, not when it arrives at far away web surfers’ PCs and hits their screens. On that footing, they said, any defamation was not committed in Australia, and the court should not hear the case.

Dow Jones’ argument was that in the Internet age that is the only fair and workable rule. But the High Court rejected it. The majority judges were simply not convinced that the current rule on where defamation is regarded as being committed gives rise the impossible situation Dow Jones allege. The judges essentially raised two points in response to the media’s concerns.

First, at least under common law principles, a person can only sue for defamation in a place where he or she enjoys a reputation. This makes it most unlikely in practice that a publisher will face the cost and inconvenience of defending defamation proceedings from a particular plaintiff in many jurisdictions at once or in wholly inappropriate jurisdictions.

Second, there have long existed adequate procedural mechanisms to protect defendants from being sued in many jurisdictions at once, or in many jurisdictions one after the other, or in jurisdictions where it will be inconvenient to try a case in question.

The Court of Appeal refused even to give Dow Jones leave to appeal and the High Court, to all intents, dismissed Dow Jones’ case out of hand. The case now proceeds to trial to determine whether the remarks were defamatory after all.

While the media took great interest in Dow Jones’ application, and media commentators have expressed alarm at the possible consequences of the ruling, it will have come as no real surprise to defamation lawyers. A “country of origin” rule such as proposed by Dow Jones would only realistically be achievable in a world of uniform laws, not what the law is or is ever likely to be in the foreseeable future.

Under our system of judicial determination, courts address only the circumstances raised by the case at hand. They are reluctant to make novel rulings just because the parties raise concerns about what may happen in other cases or what ought to happen in the ideal legal world.

The court did however specifically recognise, although rather sheepishly, that “more difficult questions” may arise in future cases where plaintiffs complain in Australia that their reputation has been tarnished in both Australia and elsewhere and seek damages on an 'international' scale. The court said that consideration may need to be given to developing defences to defamation actions which focus on the reasonableness of the publisher’s conduct.

It might be remarked that Mr Robertson and co chose a poor example to take as test case. The circumstances were always against them. Mr Gutnick specifically only seeks damages in his Australian case for the Australian acts of publication. He also undertook not to sue Dow Jones anywhere but Australia (at least for those damages) so the risk of multiple actions disappeared. Added to this, Dow Jones had accepted paid subscriptions from customers in Australia.

As an exercise in law reform, Dow Jones' efforts, no doubt costly, were a dismal failure.

Hong Kong lawyers in particular will have been unsurprised. The circumstances of Gutnick are almost identical to those in a 1999 Hong Kong case InvestAsia v Kodansha where a Japanese Hong Kong resident sued a Japanese print and online magazine in Hong Kong over an alleged libel. As in Gutnick, the magazine applied unsuccessfully for a stay saying the plaintiff should sue them where they were based, in Japan. As the judge eloquently put it on that occasion “the place to vindicate a damaged reputation in Hong Kong is Hong Kong”.