Strange brew -- but free speech holds out against confidentiality challenge

A tricky issue relating to the protection of rights in confidentiality versus freedom of speech was the subject of a lengthy and somewhat repetitive decision of the European Court of Human Rights (Judge Garlicki presiding, Judges Bratza, Bonello, Mijovic, Bjorgvinsson, Bianku and Poalelungi, and L Early) this Tuesday in Financial Times Ltd and others v United Kingdom (App. No. 821/03).

On 30 October 2001 mega-brewery Interbrew, contemplating a possible takeover bid for South African Breweries (SAB), asked its advisers Goldman Sachs to prepare a preliminary working document. Even the existence of the document was confidential: it was market-sensitive since it disclosed a possible takeover bid. A little later, someone obtained a copy of the document and prepared copies of it, which the Financial Times newspaper (FT) claimed to be 'doctored' in that they contained a fabricated offer price and timetable for the bid. That person sent copies of the doctored document to various publishers of news.

An FT journalist, having received a doctored copy, contacted Interbrew whose chief executive officer said Interbrew had been looking at a bid for SAB, but that it was not true that a bid was imminent. On 27 November, the FT published a story based on the doctored copy and on the conversation with the Interbrew's CEO. Other newspaper publishers, having also received doctored copies, also published articles on the bid. The result of these stories being published was that Interbrew's share price fell while SAB's rose. The volume of SAB's shares traded on 27 November 2001 was less than 2 million. On 28 November 2001, it was more than 44 million.

On 19 December 2001 Interbrew secured interim injunctive relief, forcing the FT and the other newspaper publishers to preserve and, within 24 hours, deliver up their doctored copies of the document, on the ground that a person who, albeit innocently, facilitated the tortious act of another had to cooperate in righting that wrong. In March 2002 the Court of Appeal dismissed the publishers' appeals, holding that the public interest in Interbrew being able to take proceedings against the source for breach of confidence outweighed that of protecting journalists from having to reveal their sources. In July of the same year the House of Lords refused leave to appeal, following which Interbrew required the FT and the other publishers to comply with the court order for delivery up of the documents. They refused and complained to the European Court of Human Rights that the original decision to order them to disclose the leaked document to Interbrew violated their right to freedom of expression as provided in Article 10 of the European Convention on Human Rights.

The Court, holding in favour of the FT and the other newspapers, found that there had been a breach of their freedom of expression under Article 10. In its view

* Even though the disclosure order had not been enforced, that had not removed the harm since, however unlikely such a course of action appeared, the order remained capable of being enforced. It followed that that order constituted an interference with the newspapers' right to freedom of expression.

* On the basis that there was such an interference, it was next necessary to examine whether the interference was justified under Article 10(2).

* The interference was one which was 'prescribed by law' within the meaning of Article 10(2). It was intended to protect the rights of others and to prevent the disclosure of information received in confidence, both of which were legitimate aims.

* Since the aims of the interference were themselves legitimate, it next had to be asked whether that interference was necessary in a democratic society.

* Freedom of expression was one of the essential foundations of a democratic society and the safeguards guaranteed to the press were particularly important. Further, protection of journalistic sources was one of the basic conditions for press freedom. Without such protection, sources might be deterred from assisting the press in informing the public on matters of public interest. As a result, the vital 'public watchdog' role of the press might be undermined and the ability of the press to provide accurate and reliable reporting might be adversely affected.

* Having regard to the importance of the protection of journalistic sources for press freedom in a democratic society and the potentially chilling effect that an order for disclosure of a source had on the exercise of that freedom, such a measure could not be compatible with Article 10 unless it was convincingly justified by an overriding requirement in the public interest.

* It was for the national authorities to assess in the first place whether there was a 'pressing social need' for the restriction and, in making their assessment, they enjoy a certain margin of appreciation. However in this case the national margin of appreciation was circumscribed by the interest of democratic society in ensuring and maintaining a free press. That interest would weigh heavily in the balance in determining whether the restriction was proportionate to the legitimate aim pursued.

* Limitations on the confidentiality of journalistic sources called for the most careful scrutiny by the Court, whose role was not to take the place of the national authorities but rather to review the case as a whole, in the light of Article 10, and consider whether the decision taken by the national authorities fell within their margin of appreciation. The Court thus had to look at the interference and determine whether the reasons adduced by the national authorities to justify it were 'relevant and sufficient'.

* Article 10 protected a journalist's right, and duty, to impart information on matters of public interest so long as he was acting in good faith in order to provide accurate and reliable information in accordance with the ethics of journalism.

* Disclosure orders had a detrimental impact not only on the source in question, whose identity might be revealed, but also on the newspaper against which the order was directed, whose reputation might be negatively affected in the eyes of future potential sources by the disclosure, and on the members of the public, who had an interest in receiving information imparted through anonymous sources and who were also potential sources themselves.

* The public perception of the principle of non-disclosure of sources might suffer no real damage where it was overridden in circumstances where a source was clearly acting in bad faith with a harmful purpose and disclosed intentionally falsified information. However, the courts should be slow to assume, in the absence of compelling evidence, that those factors were present in any particular case.

* Given the multiple interests in play, the conduct of the source could never be decisive in determining whether a disclosure order ought to be made but would merely operate as one, albeit important, factor to be taken into consideration in carrying out the balancing exercise required under Article 10(2).

The IPKat thinks this was a close call, since the facts relate to a situation in which one of two morally innocent parties has to suffer: a company whose takeover target suddenly becomes more expensive through a deceitful breach of confidence and a newspaper which in good faith seeks to report and comment on matters of immediate concern to the commercial community. Merpel doubts that orders of this nature have much of a chilling effect in the United Kingdom anywhere, where the media are so powerful and the mechanisms for law enforcement so puny.

SAB here

SABIP here