Real Madrid CF, a footballing institution not used to losing in Europe, may have suffered a potential loss last week.
In connection with the long-running Le Monde defamation case, the French Court of Cassation asked the Court of Justice of the European Union (“CJEU”) whether a breach of the principle of press freedom, guaranteed by the EU’s Charter of Fundamental Rights (“Charter”), justified recourse to the public policy clause. The full list of questions referred to the CJEU can be found here.
The case is one of a number of high-profile defamation claims in the press at the moment, but the Advocate General’s Opinion raises questions about whether substantial financial penalties awarded in defamation cases in another EU Member State will be enforceable.
If the CJEU follows the Advocate General’s approach, awards that would have a “manifestly unreasonable” financial impact may be unenforceable as they breach the right to freedom of expression.
Background
Almost a decade ago, the French newspaper Le Monde and one of its journalists were ordered by the Spanish supreme court to pay a penalty for the publication of an article claiming that there were links between the football club and Dr Fuentès, who was branded the Spanish "doping doctor" for his involvement in running one of the world's largest sports doping rings.
The Spanish court ruled that the article was defamatory and ordered the newspaper company Société Éditrice du Monde (Le Monde's parent company) to pay a fine of €390,000 and additionally that the company and its journalist, jointly and severally, pay a fine of €33,000.
Real Madrid applied for enforcement of these judgments in France but, in 2020, the Paris Court of Appeal dismissed its application, having recourse to the public policy clause. In short, public policy is a protection mechanism against a foreign rule that is deemed to be outrageous.
According to the French court, being ordered to pay such a penalty has a deterrent effect on the involvement of journalists and media organisations in the public discussion of matters of community interest, thereby breaching freedom of the press and freedom of expression.
The French Court of Cassation then asked the CJEU whether, in the EU legal order, the freedom of the press constitutes a fundamental principle, the breach of which can justify recourse to the public policy clause. Last week, the CJEU published the Opinion of First Advocate General Maciej Szpunar.
The Advocate General’s Opinion
In his Opinion, the Advocate General considers that a Member State in which an enforcement is being sought, of a judgment such as the penalty imposed on Le Monde, "must refuse or revoke enforcement where it would give rise to a manifest breach of freedom of expression."
While the concept of 'deterrent effect' is not used consistently in the case law on freedom of expression, in particular where an order relates to compensatory damages, that the risk of a deterrent effect going beyond the situation of the person directly concerned justifies refusal of enforcement in that it constitutes a manifest and disproportionate breach of freedom of the press in the Member State in question.
His Opinion concludes that the overall sum that an individual is required to pay should be considered "manifestly unreasonable", where that person would have to struggle for years to pay it in full or where that sum is several dozen times the standard minimum salary in the Member State concerned. For a corporate entity, the sum of damages which media companies are ordered to pay must not be such as to threaten their economic foundations.
The Advocate General proposes that Article 45(1) of the Brussels I Regulation, read in conjunction with Articles 34(1) and 45(2) of the Brussels I Regulation, and Article 11 of the Charter, should be interpreted as meaning that a Member State in which enforcement of a judgment given in another Member State is sought, must refuse or revoke a declaration that the decision is enforceable where its implementation would lead to a manifest infringement of the freedom of expression guaranteed in Article 11 of the Charter.
The Advocate General suggests that such infringement exists where the enforcement would create a potential deterrent effect on the participation in the debate on matters of public interest, both of the persons targeted by the conviction and of other press companies and journalists in the relevant Member State.
In the Advocate General's view, a potential deterrent effect arises where the overall sum the payment of which is sought is manifestly unreasonable in the light of the nature and economic situation of the person concerned.
The full text of the Opinion is published on the Court of Justice of the European Union website here. It will be interesting to see whether the Court follows the Advocate General’s Opinion, as this could see an increase in the number of challenges to the enforcement of foreign awards on public policy grounds.
Find out more about our Sports Law expertise here, or contact Matt Phillip, Partner and Head of Sports Law, or Euan Small, Solicitor in our corporate finance team for more information on the topics covered in this article.