Ruling heightens risk of UK data and defamation claims for US media

The judgment of the court in the case of Soriano v Forensic News LLC clarified how the territorial scope of the EU General Data Protection Regulation (EU GDPR) may be interpreted by English judges in the context of foreign-based publishers, as well as when it will be possible for defamation claimants to serve their claims on companies based outside of England and Wales.

The case

The claimant, Walter Soriano, is an Israeli national and British citizen who is resident in the UK. The case primarily concerned eight publications and 432 tweets and Facebook posts published by multiple defendants, which included the corporation which owns Forensic News LLC and journalists who write for the publication, all of whom were domiciled in the US. The publications contained numerous allegations about Soriano, including that he “is the ‘thug’ of the current Prime Minister of Israel” and that he “is guilty of multiple homicide”.

Soriano brought claims in libel, misuse of private information (MOPI), malicious falsehood, data protection and harassment in the High Court. Mr Justice Jay, the judge who considered the case in the High Court, granted Soriano permission to serve the libel and MOPI claims on the US defendants but refused to allow service out of the jurisdiction in relation to all other claims.

Five out of the six defendants appealed against the High Court’s decision and Soriano cross-appealed the judge’s refusal to allow service out of the jurisdiction for the data protection and malicious falsehood claims.

Core issues the Court of Appeal had to consider included the circumstances in which the GDPR applies to non-EU/UK media publications, and the correct interpretation of section 9 of the Defamation Act 2013, which applies to defamation claims against defendants who are domiciled abroad.

The data protection claim

Soriano’s scope to bring data protection claims against the defendants hinged on whether he could show that he had a realistic prospect of success of proving that the defendants’ processing of personal data was subject to the EU GDPR. The Court of Appeal did not need to decide whether the activities fell within the scope of the EU GDPR, but rather just needed to decide if the point was arguable. The High Court had held that the defendants’ activities fell outside the territorial scope of the Regulation, but the Court of Appeal disagreed, holding that it was arguable that they fell within its scope.

Under Article 3(1) of the EU GDPR an organisation or individual will fall under the scope of the Regulation if their processing of personal data takes place in the context of activities of an establishment of a controller or a processor in the EU, regardless of whether the processing takes place in the EU or not. Under Article 3(2), the EU GDPR also applies where the processing of personal data concerns EU data subjects and is carried out by a controller or processor established elsewhere, so long as the processing relates to either the offering of goods or services to data subjects in the EU, or the monitoring of their behaviour as far as their behaviour takes place within the EU.

The Court of Appeal allowed Soriano’s cross-appeal on the data protection issue, holding that it was arguable that the defendants were “established” in the EU for the purposes of Article 3(1) of the EU GDPR and that it was arguable that they fell within the scope of Article 3(2)(b). Whilst this case concerned the EU GDPR, as the claim was brought before the end of the Brexit transition period, it is likely the English courts would adopt a similar interpretation in respect of Article 3 of the UK GDPR as both texts are substantially the same.

How the court reached its view

“Established” is defined in the EU GDPR as implying “[having] the effective and real exercise of activity through stable arrangements”. Put simply, this means that the entity is carrying out stable business activity in the EU. Lord Justice Warby, who issued the leading judgment for the Court of Appeal, said that there is a low bar to show that a defendant is established in an EU member state.

In deciding that the defendants could be said to be “established” in the EU, Lord Justice Warby placed reliance on the fact that they had decided to make their output available in the UK and the EU.

For example, they had posted on Twitter that individuals in the EU and UK could subscribe to Forensic News in pound sterling or euros via the Patreon platform. According to the judgment, Patreon subscriptions accounted for more than 80% of Forensic News’ income. The court also considered that the defendants had more than a “minimal readership” in the EU and UK and that subscription arrangements for online media publications are “stable in nature”.

These factors persuaded the court that Soriano had more than a realistic prospect of success of showing that the claims fell within the territorial scope of the EU GDPR.

The court said that the further conditions for serving claims outside of the jurisdiction of England and Wales, outlined in Practice Direction 6B that supplements the Civil Procedure Rules, were met. It considered England and Wales was the most appropriate jurisdiction in which to bring a claim, and ruled that Soriano was entitled to serve out of the jurisdiction in relation to the data protection claim.

Implications of the court’s findings

This decision presents a concerning ruling for foreign media companies. It suggests that simply seeking UK and/or EU subscribers could subject a publisher to the requirements of the UK and/or EU GDPR. Foreign defendants need only have more than a “minimal readership” in the jurisdiction. This sets a low threshold as, in the digital age, it is increasingly likely that a media company would meet this test in numerous jurisdictions around the world.

It is notable that the Court of Appeal has invited the Information Commissioner’s Office (ICO), the UK’s data protection authority, to consider intervening in any future litigation in the case in relation to the interpretation of the territorial scope provisions contained in Article 3 of the EU GDPR. It will be interesting to see if the ICO decides to intervene and if it believes that Lord Justice Warby’s interpretation of the provisions is practical in a digital age, or whether it recognises that having such a low bar to meet the criteria for establishment could be too onerous for foreign data processors and controllers.

The defamation claim: section 9 of the Defamation Act 2013

To be able to raise a defamation claim against the US-based defendants, Soriano had first to convince the courts that England and Wales is the most appropriate place in which to bring such an action in respect of the statements complained of. Soriano was successful on this point before the High Court, and the Court of Appeal has now dismissed the defendant’s appeal against that earlier ruling. However, aspects of the Court of Appeal’s findings in relation to the defamation claim differ to those of the High Court.

The right legal test

The Court of Appeal considered what the right legal test is for determining whether the courts of England and Wales are the right place for defamation claims to be heard. Lord Justice Warby was tasked with deciding whether the test laid out in section 9 of the Defamation Act 2013 is a modification of the classic common law test of ‘forum conveniens’, which is used to ascertain which jurisdiction is the most suitable to bring a claim, or whether section 9 introduced a novel regime.

Section 9 provides that a court does not have jurisdiction to hear and determine an action in defamation unless the court is satisfied that, of all the places in which the statement complained of has been published, England and Wales is clearly the most appropriate place in which to bring the claim.

The forum conveniens test sets out the circumstances in which the court may grant a claimant permission to serve a defendant out of the jurisdiction. In order for permission to be granted, the case must meet the gateway requirements for service out of the jurisdiction enshrined in Practice Direction 6B, and the claimant must also show that they have a real prospect of success and that England and Wales is the “proper place in which to bring the claim”.

Lord Justice Warby held that section 9 is not a novel test, but merely modifies the common law test in two important ways. Firstly, it requires the court to determine jurisdiction by considering “all places in which the statement complained of has been published”. Secondly, it treats substantially similar statements as if they were “a statement complained of”.

Because the Court of Appeal considered section 9 to be a modification of the common law test, it held that the standard of proof defamation claimants must meet to serve claims on defendants based outside of the jurisdiction of England and Wales is that of “good arguable case”. This is consistent with the standard of proof that has to be met in classic forum conveniens cases, but it is a lower standard of proof than the High Court had said Soriano had to meet, and which the Court of Appeal had accepted in an earlier case, which was that of “balance of probabilities”, where the claims must be deemed to have a more than 50% chance of success.

Implications of the court’s findings

The court’s ruling gives much needed clarification on the standard of proof to be met in section 9 cases, as the Court of Appeal in the case of Wright v Ver, and in the High Court in the present case, had departed from the classic ‘good arguable case’ standard and had accepted that the balance of probabilities should apply in such cases.

Defamation claimants now need only satisfy the court that they have more than a realistic prospect of success of proving that England and Wales is the correct jurisdiction in which to bring the claim, as evidence to support that the conclusion is plausible. They do not need to show that they have more than a 50% chance of winning the point.

The defamation and MOPI claims: reasoning

The Court of Appeal ruled that Soriano is allowed to serve out of the jurisdiction in relation to the libel claim. In dealing with the requirement that England and Wales “is clearly the most appropriate place” to bring the action, the court considered the fact that Soriano is a British citizen whose reputation was centred in the jurisdiction. The court considered he had no significant reputation in the US and was not an “international businessman” as characterised by the defendants.

The court also considered the fact that the number of unique page views for the publications complained of as libellous were 2,180 in England and Wales, compared with 3,594 in California. Once California had been identified as a competing jurisdiction, the defendants had the burden of providing evidence which proved that the US state was a more appropriate jurisdiction in which to bring a claim. The Court of Appeal considered that Mr Justice Jay in the High Court had been entitled to place weight on the defendants’ failure to adduce evidence to support their point when ruling in Soriano’s favour.

With regard to the MOPI claims, which were held to have a reasonable prospect of success at trial, Lord Justice Warby considered that they would have been too trivial to justify service out of the jurisdiction if they were standalone claims. However, he considered that Mr Justice Jay had been entitled to exercise his discretion to grant permission when viewing the MOPI claim in conjunction with the libel claim.

An important ruling for publishers

The case is important for foreign defendants in cases where claims are raised in the context of their publications.

The judgment of the Court of Appeal clarifies how section 9 of the Defamation Act 2013 applies and, while it has confirmed that a lower standard of proof applies to such cases, foreign defendants may take comfort from the fact that the court said claims must be sufficiently serious to merit the court granting permission to serve out of the jurisdiction. Lord Justice Warby’s comments that the MOPI claims, in and of themselves, would have been too trivial to merit service out of the jurisdiction if raised in isolation is evidence of this.

Foreign defendants may also take comfort from the Court of Appeal’s commitment to deterring libel tourism. Lord Justice Warby placed great weight on the geographical location of the claimant’s personal reputation and business interests as well as the location of the readership of the articles in reaching his decision to allow service of the libel claims outside the jurisdiction of England and Wales.

The court’s findings in the context of data protection claims are also significant and it will be interesting to see whether the defendants seek permission to appeal this decision. Lord Justice Warby’s invitation to the ICO to intervene in any future litigation in this case indicates that further scrutiny of this issue, whether in the Supreme Court or at trial, is necessary.

Co-written by David Barker, Lottie Peach and Lucia Doran of Pinsent Masons.