Economic Crime and Corporate Transparency Bill

Lord Faulks Excerpts

Report stage
Tuesday 27th June 2023 Lords Chamber

Moved by

[Lord Faulks]

94: After Clause 183, insert the following new Clause—
“Strategic lawsuits against public participation
(1) It is an offence for a person or entity without reasonable excuse to threaten civil litigation against another person or entity with intent to suppress the publication of any information likely to be relevant to the investigation of an economic crime.(2) A person guilty of an offence under this section is liable—(a) on summary conviction in England and Wales, to a fine;(b) on summary conviction in Scotland or Northern Ireland, to a fine not exceeding the statutory maximum;(c) on conviction on indictment, to imprisonment for a term not exceeding two years or a fine (or both).”Member’s explanatory statement
This amendment introduces a new criminal offence to deal with groundless threats in pursuance of SLAPPS in order to suppress investigations into economic crimes.

[Lord Faulks (Non-Afl)]

My Lords, we now come a group of amendments about strategic lawsuits against public participation, or SLAPPs. These were much debated at Second Reading and in Grand Committee. As noble Lords will be aware, SLAPPs is the rather ungainly acronym to describe the abusive threats of litigation and actual litigation by deep-pocketed individuals with the intention of preventing journalists or others from revealing the truth, very often about economic crime or, at the very least, economic activity which the claimant would much rather was not revealed at all, or certainly not to the general public. This is a worldwide problem which has received a variable response.

In a sense, there is nothing new about SLAPPs. Powerful men have often used litigation to try to silence their critics, but there have recently been some egregious examples. The difficulty always exists in separating out genuine complaints by powerful men or organisations and those which have been commenced for a collateral purpose. When SLAPPs were debated at Second Reading, it was thought that amendments to prevent or limit such lawsuits would be outside the scope of the Bill. I am glad to say that that has now proved not to be the case, although it is clear that the relevant amendments, either mine or the Government’s, are focused on economic crime as opposed to wider areas of criminal activity which might provoke a strategic lawsuit. The Government’s position at Second Reading appeared to be that they were sympathetic to the notion of legislation in this area. However, they thought that the whole issue needed separate and mature consideration and should not be part of any amendment to this Bill.

I am delighted that the Government have changed their mind and brought forward amendments in this group which we will debate. I understand that the new Lord Chancellor has had much to do with this, and I thank him and the Minister for tabling the amendments.

A number of noble Lords have spoken about SLAPPs, including the noble Lords, Lord Agnew and Lord Cromwell, who gave a graphic description of the mischief at which any change in the law should be directed. My difficulty with any potential amendment was always that the courts have powers already to strike out abusive proceedings, but they tend to be extremely cautious about doing so, on the basis that striking out is a somewhat draconian remedy. Courts tend to be persuaded that it is better to see how the evidence emerges before putting a case out of its misery, but that can be too late. Huge expenditure will have been incurred, often by relatively impecunious defendants. Sometimes they have no realistic alternative but to capitulate—delay is plainly the friend of those who use SLAPPs. The best chance, in my experience, of striking out a claim is when there is a clear point of law, but even then there can be appeals and further expense, which work in favour of an abusive claimant.

The government amendments are clearly aimed in the right direction, but I can already foresee a few difficulties. There will be significant arguments as to what does or does not constitute a SLAPP, for example. That issue of itself has a lot of litigation potential. I am also concerned about the process of making the relevant Civil Procedure Rules. This can be a lengthy process, and is always a carefully considered process. I have studied the recent minutes of the Civil Procedure Rule Committee, so as to inform myself as to how the committee approaches rule changes. I would be grateful if the Minister could explain to the House how this amendment will make its way into the rules and the likely timescale.

Those reservations apart, my view is that we should go further. As pointed out at Second Reading by the noble Lord, Lord Thomas of Gresford, who has put his name to this amendment, there is no obvious reason why there should not be a criminal offence in this area.

I invite the House to consider a client consulting his expensive lawyers. He wants to take every step he can through litigation to suppress and exhaust the funds of those who would expose him. He utters those words which lawyers tend to love: “I don’t mind how much it costs”. The advice that he will or should receive after the government amendments become law is that there is a risk that the courts might decide to stop the litigation if it is regarded as abusive. “But”, the litigant says, correctly, “It will surely still be a lengthy and expensive process before a court even gets to consider that option”. However, if the Government were to accept my amendment, then the advice he should receive is that he risks criminal prosecution if he, without reasonable excuse, threatens litigation with the intent to suppress the publication of any information likely to be relevant to the investigation of an economic crime. This potential offence gives room for a defence, of course, but its very existence should act as a considerable deterrent against the sort of behaviour we want to stop. If this amendment becomes law then the hypothetical client might think much more carefully before threatening or embarking upon abusive litigation.

This amendment is particularly relevant to journalists, who have a huge role in tackling economic crime. I declare my interest as chair of the Independent Press Standards Organisation. It is also of importance to anyone who wants to reveal economic crime. It is entirely consistent with the aims of the Bill. Let us bear in mind that the opportunity to legislate in this space is unlikely to present itself again, or at least not for some time. I beg to move.

[Lord Thomas of Gresford (LD)]

My Lords, I remind your Lordships that, at Second Reading of this Bill, on 8 February, I referred to a legal action brought by Yevgeny Prigozhin, founder of the Wagner Group, who has been somewhat in the news over the last weekend, against the journalist Eliot Higgins, who had investigated his activities. When his case was justly struck out last May, Prigozhin said that he brought court cases against journalists because

“in any issue there should be room for sport”.

The cost to Mr Higgins was in the region of £70,000, although he won his case. That is the sort of abuse of the English legal system that the current crop of so-called reputational lawyers have brought on behalf of Russian oligarchs and many other large co-operations that resent too close a look into their operations.

--- Later in debate ---

I think and hope that I have answered the various points that have rightly been raised. I therefore urge my noble friend Lady Stowell not to press her amendments and I will move the government amendments in due course.

[Lord Faulks (Non-Afl)]

My Lords, the Minister quite rightly emphasised that these amendments are concerned with two fundamental points: free speech and the public interest that exists to expose wrongdoing. He also said that the power, to be further elaborated by the rules, already exists. He is absolutely right to do so. In a way, the government amendments, which I welcome, tell the courts to do what they already can do. The question is whether they go far enough.

I have already indicated that I see a great deal of litigation potential in the definition of what SLAPPs may or may not be, notwithstanding the drafting. The Minister said that, with the comfort of these new rules, editors will be able to say to their journalists, “Well, we can go ahead. Sit back and do your worst”. I wonder how realistic that is, given that a journalist seeking after truth and attempting to expose wrongdoing will nevertheless expose him, her or their journal to a considerable hurdle before there is any chance of a striking out taking place. We hope the rules will come into effect in due course to encourage courts to take that view, but my experience, sadly, is that courts are reluctant to strike out claims on the basis that it is very difficult, without evidence, to come to a conclusion that something is an abusive process.

However, I accept that, for the moment, the view is taken that this amendment to create a criminal offence goes too far. I am afraid I do not accept the characterisation that it would “criminalise access to justice”; that was a most unfortunate phrase. In fact, it would create an offence that would help prevent the suppression of the publication of any information likely to be relevant to the investigation of economic crime. That is not criminalising access to justice; that was a most unfortunate characterisation.

However, I accept that the Government are with the spirit of the debate entered into in various stages on the Bill, and that they want to encourage the courts to intervene where necessary. I accept that, although it has expressed real concern, the House does not, for the moment, want to go as far as my amendment suggests. With some reluctance, but accepting the will of the Front Benches and of the Minister, I beg leave to withdraw my amendment.

Amendment 94 withdrawn.

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[Lord Agnew of Oulton (Con)]

My Lords, I shall be very brief. First, I thank my noble and learned friend the Minister for his active engagement on this; he knows how strongly I feel about it.

We have a complete mishmash on the principles of cost capping at the moment. For example, cases taken in the magistrates’ courts have cost capping, as do cases taken by the SRA. However, we do not have cost capping for the most important of all: those large cases where the enforcement agencies are trying to take on big-time oligarchs.

The only other thing I would say is that we have heard about Bill Browder tonight. I have spoken to him a lot over the past few months. He said, “The one clause you must get through in this Bill is the one on cost capping”. I beseech the Government to listen to us on this and bring forward a clause on cost capping.

[Lord Faulks (Non-Afl)]

My Lords, I rise briefly to support the noble Lord. Two key themes emerged from our lengthy debates on the Bill. The first was that the scale of economic crime is a major threat to the prosperity of the country. The second was that there is a significant inequality of arms between the enforcement authorities and the perpetrators of economic crimes. I could weary the House at length but I will not do so. This is an attempt to redress that inequality and not provide a disincentive for the authorities to pursue the perpetrators of economic crime.

[Lord Ponsonby of Shulbrede (Lab)]

My Lords, if the noble Lord chooses to move to a vote, we will support him. This amendment would build on last year’s Bill, which introduced similar changes to unexplained wealth orders. It is a welcome development, and I hope that the noble Lord presses his amendment to a vote.