Congress Passes Foreign Libel Judgments Bill

July 27, 2010. The House and Senate passed HR 2765 [LOC | WW], the "Securing the Protection of our Enduring and Established Constitutional Heritage Act" or "SPEECH Act". This bill, among other things, prohibits the recognition and enforcement in the United States of foreign defamation judgments when the foreign court does not afford at least as much protection for freedom of speech and press as the U.S. court.

Introduction. Currently, the sale and distribution of books and other written materials over the internet exposes authors, publishers and internet service providers (ISPs) in the U.S. to libel suits around the world. Rachel Ehrenfeld, one such book author, has been a proponent of this legislation.

This bill is an attempt to protect U.S. authors, publishers and ISPs from abusive speech suppressing litigation abroad. It does this by precluding the enforcement in state or federal courts of certain foreign libel judgments.

Kurt Wimmer, an attorney with the Washington DC office of the law firm of Covington & Burling who represents publishers and ISPs, wrote in his prepared testimony for a Senate Judiciary Committee (SJC) hearing on February 23, 2010, that "publishers can be sued in foreign jurisdictions that do not protect free expression simply because their work can be accessed through the Internet". He added that "courts, litigants and prosecutors have pursued distant authors based on Internet publications intended for the authors' local readers".

The bill recites in its findings that "Some persons are obstructing the free expression rights of United States authors and publishers, and in turn chilling the first amendment to the Constitution of the United States interest of the citizenry in receiving information on matters of importance, by seeking out foreign jurisdictions that do not provide the full extent of free-speech protections to authors and publishers that are available in the United States, and suing a United States author or publisher in that foreign jurisdiction."

Also, when an foreign court issues a libel judgment against a U.S. author, publisher or ISP, but the foreign party has not yet brought an action in a U.S. court to enforce the foreign judgment, if the U.S. party brings a declaratory judgment action in a U.S. court, the foreign party may prevail on a motion to dismiss for lack of personal jurisdiction, for failure to state a claim, or for the absence of a case or controversy. The bill attempts to remedy this also.

Sen. Jeff Sessions (R-AL), the ranking Republican on the SJC, stated in a release on July 28, 2010, that "Free speech is a bedrock principle of our Republic, essential to our continued liberty. The passage of the SPEECH Act further cements that legacy and strengthens free speech protections for all Americans. It will ensure that American writers cannot be penalized by foreign libel judgments that do not comply with American law, removing a dangerous chilling effect on the exercise of First Amendment rights."

Sen. Sessions (at right) added that this bill "will also give Americans who have been subject to foreign libel judgments the opportunity to petition an American court and have their name cleared. This is an important bipartisan achievement and a reminder that Congress’ job is not to control and diminish free speech -- including political advocacy -- but to allow for the robust competition of ideas."

Legislative History. The House Judiciary Committee's (HJC) Subcommittee on Commercial and Administrative Law held a hearing on February 12, 2009. See, HJC web page with hyperlinks to prepared testimony.

Rep. Steve Cohen (D-TN) introduced HR 2765 on June 9, 2009. The House passed one version of this bill on June 15, 2009.

The SJC held a hearing on February 23, 2010. See, SJC web page for this hearing. The SJC amended and approved the bill on July 13, 2010. The full Senate amended and passed the bill on July 19. On July 27, the House passed the version of the bill passed by the Senate.

The 110th Congress also considered, but did not pass, related legislation. See, HR 5814 (110th) [LOC | WW], the "Free Speech Protection Act of 2008", introduced on April 16, 2008, by Rep. Peter King (R-NY). See also, story titled "Rep. King Introduces Free Speech Protection Act" in TLJ Daily E-Mail Alert No. 1,756, April 29, 2008.

Bill Summary. HR 2765 provides for the non-recognition of foreign libel judgments on either of two grounds: lack of First Amendment like protection and exercise of personal jurisdiction without due process like limitations.

The bill as enacted by the Congress provides that "Notwithstanding any other provision of Federal or State law, a domestic court shall not recognize or enforce a foreign judgment for defamation unless the domestic court determines that -- (A) the defamation law applied in the foreign court's adjudication provided at least as much protection for freedom of speech and press in that case as would be provided by the first amendment to the Constitution of the United States and by the constitution and law of the State in which the domestic court is located; or (B) even if the defamation law applied in the foreign court's adjudication did not provide as much protection for freedom of speech and press as the first amendment to the Constitution of the United States and the constitution and law of the State, the party opposing recognition or enforcement of that foreign judgment would have been found liable for defamation by a domestic court applying the first amendment to the Constitution of the United States and the constitution and law of the State in which the domestic court is located."

The bill also provides that "Notwithstanding any other provision of Federal or State law, a domestic court shall not recognize or enforce a foreign judgment for defamation unless the domestic court determines that the exercise of personal jurisdiction by the foreign court comported with the due process requirements that are imposed on domestic courts by the Constitution of the United States."

The bill next addresses ISPs. It provides that "Notwithstanding any other provision of Federal or State law, a domestic court shall not recognize or enforce a foreign judgment for defamation against the provider of an interactive computer service, as defined in section 230 of the Communications Act of 1934 (47 U.S.C. 230) unless the domestic court determines that the judgment would be consistent with section 230 if the information that is the subject of such judgment had been provided in the United States."

47 U.S.C. § 230 provides in part that "No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider".

The bill also creates a cause of action "for a declaration that the foreign judgment is repugnant to the Constitution or laws of the United States", including that "it would not be enforceable" under the above quoted sections.

It adds that it is the sense of the Congress that such an action "shall constitute a case of actual controversy".

Wimmer wrote in his February 23 testimony that "Foreign libel judgments, especially those accompanied by a ``declaration of falsity,´´ also impose reputational harms on authors and publishers. No author or publisher wants to be tarred with the brush of a defamation judgment. This is especially true if that judgment states that the author or publisher published statements deemed by a court to be untrue. Unless a United States author is provided with a mechanism to challenge the foreign judgment on his or her own initiative, the foreign libel plaintiff can deprive the author or publisher with an opportunity to vindicate his or her reputation."

He added that "most American authors and publishers must wait for the foreign plaintiff to take action enforcing the judgment in the United States. This limitation permits the foreign plaintiff to use that foreign judgment to chill future criticism while also ensuring that a United States court will not have jurisdiction over him to declare the judgment unenforceable."

The bill defines "domestic court" to include both federal and state courts.

Rachel Ehrenfeld. Rachel Ehrenfeld has urged passage of this legislation. She wrote a book [Amazon] titled "Funding Evil: How Terrorism Is Financed -- and How to Stop It" in which she alleged that Khalid Salim Bin Mahfouz financially supported terrorism. He sued her in England, and obtained a default judgment.

She filed a complaint in U.S. District Court (SDNY) against Mahfouz seeking a declaratory judgment under the Declaratory Judgment Act, which is codified at 28 U.S.C. § 2201, that the foreign judgment is not enforceable in the U.S. for violating the First Amendment. The District Court dismissed for lack of jurisdiction over Mahfouz, and the Court of Appeals affirmed. See, story titled "2nd Circuit Affirms in Ehrenfeld v. Mahfouz" in TLJ Daily E-Mail Alert No. 1,725, March 3, 2008.

See also, Ehrenfeld's prepared testimony [PDF] for the February 12, 2009, HJC hearing.

Also, the New York legislature responded to the Mahfouz affair by passing its Libel Terrorism Protection Act. See, story titled "New York Senate Passes Libel Terrorism Protection Act", also in TLJ Daily E-Mail Alert No. 1,725, March 3, 2008.

Effectiveness. This bill is likely to provide some protection to individuals, such as Ehrenfeld, who have no assets abroad. Abusive foreign libel judgment creditors will be unable to enforce their foreign monetary judgments against such authors in the U.S.

However, this bill is likely to provide less protection to individuals and businesses that have assets abroad that are subject to seizure. Moreover, avoided nations with by despotic regimes provides limited results. This legislation is directed at Democratic nations, including the United Kingdom, France, and Australia, that have a history of abusive libel litigation against U.S. parties.

This bill does nothing to prevent foreign libel judgment creditors from enforcing their judgments in the foreign countries in which they obtain their judgments.

For example, Dow Jones was successfully sued in Australia for an allegedly defamatory news story published on the internet. See, December 10, 2002, opinion of the High Court of Australia in Dow Jones v. Gutnick, and story titled "High Court Rules Australia Has Jurisdiction Over Dow Jones Based on Web Publication" in TLJ Daily E-Mail Alert No. 564, December 10, 2002.

Jack Goldsmith and Tim Wu wrote in their book [Amazon] titled "Who Controls the Internet: Illusions of a Borderless World", that "Within two years of the decision, Dow Jones agreed to pay Gutnick AU$180,000 in damages and AU$400,000 in legal fees to settle the case."

They offered the analysis that "Australia can effectively coerce Dow Jones because Dow Jones is a multinational company with employees, facilities, contracts, and bank accounts in Australia. But the vast majority of Internet users -- students, e-consumers, porn purveyors, chat room participants, web-page operators, bloggers, and over 99 percent of other Net users -- have no connection to Australia or to any other country other than the one in which they live."

Similarly, Wimmer testified on February 23 that Congressional legislation would "only be a step. International law reform also will be essential".