SLAPPs: New reforms to address SLAPPs in economic crime proceedings

What is a SLAPP?

There is currently no legal definition of a SLAPP lawsuit (although, as we explain below, this is set to change in economic crime proceedings).  SLAPPs were described by the Government in its Call for Evidence as having the following features:  

• They target acts of public participation. Public participation can include academic research, journalism and whistle-blowing activity concerned with matters of societal importance, such as illicit finance or corruption.

• They aim to prevent information in the public interest from being published. This can be by threatening or bringing proceedings which often feature excessive claims.

SLAPPs are most commonly associated with defamation claims, although the Call for Evidence noted that they may also be pursued in other fields of law, including data protection, privacy and trade mark claims.

The Government’s proposed SLAPP reforms

Following the Call for Evidence, the Government stated that it was “very concerned about the effects of SLAPPs on freedom of speech and on public interest investigation and reporting” and concluded that SLAPPs “have a chilling effect, both on the individual against whom they are brought and systematically”.

In its Response, published in July 2022, the Government announced that it would be introducing new reforms to introduce a new statutory early dismissal process to strike out SLAPPs and to avoid lengthy SLAPP litigation, which would be made up of the three following parts:

1. A definition of public interest.

2. A set of criteria for the courts to determine whether a case should be classified as a SLAPP based on one or more of the common characteristics of such actions:

3. A merit test.

The Government proposed the following three-part set of criteria to identify a SLAPP claim: 

a) that it is in the public interest;

b) that it has some features of an abuse of process, which would be set out in an illustrative non-exhaustive list of factors that are common hallmarks of SLAPPs litigation, for example (but not limited to) sending a very large number of highly aggressive letters on a trivial matter; and

c) that it has insufficient evidence of merit to warrant further judicial consideration, for example where a case has no realistic prospect of success.

Finally, the Government also proposed a formal costs protection scheme to control costs, protect SLAPP defendants from excessive costs risk, and enabling unmeritorious claims to be properly defended. No further details were given in the Response, save that the costs protection regime could be created via procedural reform, under secondary legislation, with the precise levels of any costs caps, and the design of the scheme, to be explored with the Civil Procedure Rule Committee.

What’s happened since then?

One year on, and the reforms proposed by the Government have not yet been implemented in the way proposed. However, the Government has recently unveiled legislation which, for the first time, will define SLAPP lawsuits, although this will only be in the context of economic crime proceedings.  Amendments have been tabled to the Economic Crime and Corporate Transparency Bill (currently at the House of Lords report stage) which will classify a lawsuit as a SLAPP if:

1. the claimant’s behaviour in relation to the matters complained of in the claim has, or is intended to have, the effect of restraining the defendant’s exercise of the right to freedom of speech;
2. any of the information that is or would be disclosed by the exercise of that right has to do with economic crime;
3. any part of that disclosure is or would be made for a purpose related to the public interest in combating economic crime; and
4. any of the behaviour of the claimant in relation to the matters complained of in the claim is intended to cause the defendant—
   a) harassment, alarm or distress,
   b) expense, or
   c) any other harm or inconvenience,
   beyond that ordinarily encountered in the course of properly conducted litigation.

In determining the claimant's behaviour in relation to (4), the court may take into account whether the claimant's behaviour is disproportionate to the matters of complained of (including 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 to whom the claimant could have brought proceedings against (but has not), and any failure by the claimant to comply with a pre-action protocol or the Civil Procedure Rules.

Under the new legislation, there will be an early dismissal process with two tests: first, whether the claim meets the definition of a SLAPP, and secondly whether the claim has a reasonable chance of success.  The Civil Procedure Rules will be amended to include provision to ensure that a claim which is classified as a SLAPP claim may be struck out if the claimant has failed to show that it is more likely than not that a claim would succeed at trial. So, the onus will be on the claimant, rather than the defendant, to prove that the claim has sufficient merit to be able to proceed. 

If a SLAPP lawsuit is given permission to proceed, to avoid defendants facing the risk of an excessive cost burden, a provision is to be made in the Civil Procedure Rules that, in respect of a SLAPP claim, a court may not order a defendant to pay the claimant's costs except where, in the court's view, misconduct of the defendant in relation to the claim justifies such an order. 

Commentary

Although the proposed legislative reforms will only relate to economic crime proceedings, the Government claims that at least 70% of the cases referenced in an April 2022 report about SLAPPs (published by the Foreign Policy Centre and ARTICLE 19), were connected to financial crime and corruption.  Notwithstanding this, anti-SLAPPs campaigners have pointed to the fact that these reforms will not prevent all alleged SLAPP lawsuits, given that the proposed legislation only relates to economic crime cases. 

The Government’s proposed reforms in its 2022 Response raised many questions as to how they would be put into effect. The new legislative reforms provide some clarity on how those reforms may be implemented, however, the SLAPP test under the new proposed legislation is by no means clear cut.  In particular, the first and fourth limbs of the SLAPP test – both of which relate to the behaviour of and intentions of the claimant – may prove to be the battleground between the parties in establishing whether or not a claim is a SLAPP.  In addition, if defendants are successful in establishing that a claim is a SLAPP in light of the way that the litigation has been conducted, claimants may also seek to blame their legal advisors and look to be compensated accordingly.  So, if the legislation is passed in its current draft, it remains to be seen how the SLAPP test is interpreted by the courts, or the actual impact that it will have on restricting the effect of SLAPP claims relating to economic crime.

For our recent article by Clare Hughes Williams and Tom Bedford on the Solicitors Regulation Authority’s increasing powers on SLAPPs and economic crime please click here.