Protection of the Reputation

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Spring Semester 2020

Independent written essay within the field of constitutional law and human rights, 15 Credits [Master’s Programme in Constitutional Law and Human Rights, 60 hp]

Supervisor: Therese Enarsson

Protection of the Reputation

Its Role and Balance with the Right to Freedom of Expression

Sergey Blagoveshchenskiy

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It is generally agreed that in any environment in society, for individuals and businesses, the value of an unsullied reputation is great. The legal regulation of intangible assets has always been the subject of discussions, and permanently needs in legislative updating and improvement following with the realities of the development of society in social, technical and legal aspects. Honor, dignity and business reputation are social benefits protected by law, the violation of which seriously damages freedom of action and social position by creating an unfavorable impression.

After the collapse of the Soviet Union in 1991 and the transition from the sole state ownership of the means of production and centralized administrative planning to the new market relations with plurality of owners with their new types, forms, and to the competition,¹ relatively young Russian entrepreneurship turned out to be vulnerable in the face of legal uncertainty, including issues regarding intangible assets, business reputation, protection and compensation for such type of harm.

Due to contemporary media, digital, technological opportunities that provide the rapid, wide, boundless and anonymous dissemination of information, the vulnerability of this intangible asset is just as great. Reputation could be (intentionally) easily attacked and destroyed, if understanding of such a value and its proper protection would not be provided.

Notwithstanding, it is difficult to disagree with an assertion that "[the] esteem in which we are held by others is an integral aspect of our own dignity and self-esteem. As a matter of common sense, to allege that someone is, say, seriously incompetent or dishonest may well damage the esteem in which he, or she, is held by others and consequently wound his [or her]self-esteem. Such allegations may additionally cause significant economic damage. Any civilized legal system should be prepared to provide redress in these circumstances".²

However, according to international human rights law, everyone shall also have the right to hold opinions without interference and the right to freedom of expression.³

It is important hold a fair balance when protecting values guaranteed by the European Convention on Human Rights (ECHR), which may come into conflict with each other, namely, the right to freedom of expression, which is protected by Article 10, on the one hand, and the right of individuals and legal entities to protect their reputation, enshrined by Article 8 of the Convention as part of the right to respect for private life, on the other hand.⁴

Nowadays, an analysis of the European Court of Human Rights (ECtHR) case law, current Russian legislation leads to the conclusion that the reputation is protected only when information is disseminated as statements of facts, with the obligatory presence of defamatory nature there.

But what if information, which have in reality caused damages to the reputation of the individual or entity and brought them financial losses, was not vicious or defamatory in nature, but simply false information, and, from a linguistics' point of view, was framed as the subjective judgment of the author, but not as statement of fact?

In 2013, the Article 152 of the Civil Code of the Russian Federation⁵ was added with new provisions, framed in clauses 10 and 11.⁶

New clause 10 provides that almost all protection methods, presented in the Art. 152, regarding dissemination of defamation, can also be applied by courts to cases of dissemination of any information that does not correspond to reality, with that, existence of defamatory nature becomes not mandatory.

1 Matthew Johnston, The Post-Soviet Union Russian Economy, Jun 25, 2019, article.

2 Barendt, E. "What Is the Point of Libel Law?" Current Legal Problems. 52.1 (1999): 110-125.

3 Art. 19 of the Universal Declaration of Human Rights (UDHR); Art. 19 of the International Covenant on Civil and Political Rights (ICCPR); Art. 10 of the Convention for the Protection of Human Rights and Fundamental Freedoms (ECHR).

4 Chauvy and Others v. France (application no. 64915/01), para 70.

5 The Civil Code of the Russian Federation. Part One No. 51-FZ of November 30, 1994.

6 Federal Law N 142-FZ of 2 July 2013.

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4 The clause 11 has excluded the possibility for legal entities to use such remedy as a compensation for moral harm, which was previously provided for in clause 7, Art. 152 of the Civil Code and was widely used until October 1, 2013, to protect business reputation.

The new amendments to Art.152 have led to a large number of disagreements and contradictions in the existing practice of collecting compensation for non-material damage to the reputation of legal entities.

A number of scientists did not agree and did not accept from the doctrinal point of view amendments, which were made in Art. 152. They stated that the lack of possibility of compensation for moral harm to legal entities in the Civil Code, could be considered as a fact of disrespect to the norms of international law, the highest Russian judicial authorities and the realities of modern practice.⁷

The lack of legislative fixation of the concepts of "business reputation" and "reputation harm" leads to the thoughts on dependent status of the right to protection of business reputation from the other rights, including with the institution of the right to expression. Currently, legal entities may demand compensation for damage to their reputation. However, because the law does not directly provide for such protection of reputation for legal entities, the courts do not always accept these claims for protection.

The rapid development of modern information technologies leads to the expansion of technical capabilities to realize the right to expression, which in practice can lead to abuse of this right and, consequently, to a significant increase in the number of lawsuits related to the protection of reputation. In such circumstances, there is a need to strengthen the legal institution of reputation protection, underestimation of which can lead to negative economic consequences.

Consequently, the aspects listed above indicate the relevance of the research topic.

1.2. Aims and objectives

The purpose of this work is to justify the need to strengthen the institution of protecting reputation, including business reputation, as a restriction on the right to freedom of expression in the information society to ensure the necessary balance in court cases regarding these competitive rights. This is done from the perspective of ECHR and Russian law.

The subject of the research is a set of norms for regulating the protection of reputational and expression rights, as well as the application of these norms in ECtHR and domestic judicial practice. The focus is placed on the general concept of the protection of the right to expression in accordance with article 10 of the European Convention on Human Rights, the right to protection of reputation in accordance with Article 8 of the European Convention, and the right to protection of reputation in Russian legislative and judicial practice.

As part of the analysis of the right to protect reputation, I set the task of considering the following problems, the relevance of which was noted above:

– the right to protection of reputation of legal entities as active participants in a business turnover;

– the right to compensation for moral damage to legal entities in case of violation of their business reputation;

– the concept of defamation when considering claims for the protection of reputation;

– the distinction between fact and value judgment in litigation on the protection of reputation;

– what type of checks and balances exists between the right to expression and the protection of reputation?

Answering these questions will lead to an understanding of the meaning, realization, boundaries and limits of these two democratic values and how to balance them. This can contribute with knowledge to help avoid the violation of these both rights in practice.

7 Gavrilov E.V. Compensation for intangible (reputational) harm to legal entities...

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5 In this work some issues are considered, which directly reflect on the right to apply the protection of reputation, including approaches to the concepts of "statement of fact" and "value judgment" as well as the necessity of presence a defamatory nature in the disseminated information.

1.3. Method and material

The research methodological approach is based on the traditional comparative legal method of analysis, which relates to one of the most important special scientific methods in jurisprudence.⁸ I used it to compare corresponding legal concepts, phenomena and processes in the field of protection of rights and reputation and to clarify the similarities and differences between them in the functioning of the Russian and European judicial systems.

At the same time, I used inferences by analogy, based primarily on similar signs of facts, which allowed me to transfer the signs of one studied phenomenon to another. Thus, I analyzed the possibility of using the procedures and decisions of the ECtHR by Russian courts in similar situations related to the protection of reputation.

While conducting specific comparisons, I used such techniques as case studies, binary comparisons, and cross-temporal studies. Case study was the analysis of a separate cases and comparing them. Binary comparison was an approach used to identify general and special characteristics.

Cross-temporal study, including a time variable, was a useful technique for analyzing changes in litigation approaches in recent years. It should also be mentioned that a descriptive research method was necessary when collecting and summarizing information on litigations for their subsequent analysis.⁹

I tried to adhere to the methodology of interpretation of the Convention, which is used by the ECtHR case law.

Approaches to the interpretation of the Convention are divided into textual, based on the text of the Convention itself, and contextual, based on other sources of law. Textual approaches include a systematic interpretation of the article of the Convention and a special legal approach / interpretation of the concepts and terms in the ECtHR cases. Contextual approaches include a comparative legal approach involving extra-conventional sources, such as historical, legislative, cultural and social characteristics of the Council of Europe (CoE) member states and dynamic when analyzing changes in standards in the field of human rights protection.¹⁰ Thanks to a dynamic or evolutionary approach, the Convention really becomes a "living tool", when its broad interpretation can lead to the emergence of new obligations for states and a change in the content of existing ones.

In my work, I used cases of a precedent nature, which had become the basis for decisions by other courts in similar situations. Therefore, the analysis of such decisions was interesting from both a practical and theoretical point of view. I am interested in analyzing how the existing Court's judgments and principles could be used by analogy in making court decisions on other, but closely related cases. Relevant articles of the Convention are interpreted and examined in the light of the current media/digital/societal needs to ensure effective protection of rights (Principle of "Translation"¹¹). "When we know what values we want to preserve, we need only be creative about how to preserve them".¹² It is a method, that provides interpretation of legislation for preserving its initial meaning, given by the legislator to protect people and values, across time and regardless of technical developments and other circumstances.¹³

8 Konrad Zweigert & Hein Kötz, An, Introduction to Comparative Law, Second edition (1987). See also Lirieka Meintjes van der Walt, Comparative method: Comparing legal systems and/or legal cultures? article (2006)

9 Khushal Vibhute & Filipos Aynalem, Legal Research Methods, 2009, page 16.

10 Mark Van Hoecke, Methodology of Comparative Legal Research, article in Law and Method, (2015)

11 Lawrence Lessig, CODE, version 2.0. Published by Basic Books, 2006. Chapter 9, pages 157-168.

12 Id. page 165.

13 Supra note 11.

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6 2. Freedom of expression under Article 10 of the ECHR

2.1. General concept of the right to freedom of expression

The right to expression is one of the most recognized human rights and is enshrined in the constitutions of the vast majority of countries.

The general concept of the right to freedom of expression started with the case of Handyside v. The United Kingdom,¹⁴ and that case has since become, we can say, a symbol of the Court's position which has been enshrined today in many judgments, that "Freedom of expression constitutes one of the essential foundations of a democratic society and one of the basic conditions for its progress and for each individual’s self-fulfillment. Subject to paragraph 2 of Article 10, it is applicable not only to “information” or “ideas” that are favorably received or regarded as inoffensive or as a matter of indifference, but also to those that offend, shock or disturb. Such are the demands of pluralism, tolerance and broadmindedness without which there is no "democratic society".¹⁵

The general position of the ECtHR regarding the freedom of expression reaffirms "Voltaire's beliefs", as it was provided to us by Evelyn Beatrice Hall: "I disapprove of what you say, but I will defend to the death your right to say it".¹⁶

The Strasbourg court in its case law has developed principles and rules that provide the press with a special status in protection of the right to freedom of expression. As arguments in favor of a special approach in considering cases with journalists are their professional activity, obligations and statistic, which shows that journalists become victims of violations by the government in the right of expression to a much greater extent than others.¹⁷

Although the press should not go beyond certain permitted boundaries of disseminated information, in particular, regarding violation of the reputation, it is nevertheless, obliged to disseminate information and ideas on all issues of public interest that the public has the right to receive. But the Court stresses that when covering certain events, journalists have the duty to show prudence and caution.¹⁸

The Court has established and holds that journalistic freedom of expression can afford any possible recourse to a degree of exaggeration, or even provocation. The democratic society should enable the press to exercise the role of "public watchdog" in imparting information of important, serious public concern. Moreover, a journalist in certain cases may be entitled to express critical value judgments without a possibility to prove their truthfulness at the time the news was released.¹⁹

The Court has recognized the possibility to give additional protection to journalists and to provide them so called "a breathing space for error" when they even make mistakes in disseminating facts, but act in a "good faith".²⁰ For instance, the Court stated "that there is no proof that the description of events given in the articles was totally untrue and was designed to fuel a defamation campaign...".²¹ It could be concluded, that when the dissemination of information caused public concern, and at least reasonable efforts were made by journalist to verify the facts in reality, the press would not be liable for such dissemination, even if statements of facts finally proved to be untrue.²²

14 Handyside v. The United Kingdom, Application no. 5493/72. Judgment 7 December 1976, para 49.

15 See also Axel Springer AG v. Germany, Application no. 39954/08. Judgment 7 February 2012, para 78.

16 Evelyn Beatrice Hall, written under the pseudonym S. G. Tallentyre, The Friends of Voltaire, published by Smith, Elder & Co., London in 1906. See also Valya Filipova, Standards of protection of freedom of expression and the margin of appreciation in the jurisprudence of the European Court of Human Rights, article in Coventry Law Journal. 2012, 17(2), page 67.

17 Bychawska-Siniarska, Dominika, Protecting the right to freedom of expression under the European Convention on Human Rights, July 2017, page 87.

18 Supra note 16. See also Couderc and Hachette Filipacchi Associés v. France. Para 114, 140.

19 Dalban v. Romania (Application no. 28114/95), para 49.

20 Supra note 17, page 78

21 Supra note 19, para 50.

22 Supra note 17, page 78

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7 As regards to its role in assessment of moral values, the Court's position is that "the machinery of protection established by the Convention is subsidiary to the national systems safeguarding human rights. The Convention leaves to each Contracting State, in the first place, the task of securing the rights and liberties it enshrines".²³ Moreover, it is in the cases of rights to expression that the national courts have a rather large margin of appreciation, because the European Court does not set itself the task of formulating a common moral concept for all Council of Europe member states. This is important in the modern era when the views of the contracting states on moral requirements change depending on the place and time, and public authorities, in principle, are in a better position than an international judge in order to give an opinion to the exact content of their requirements.²⁴

The Court indicates, that para 2 in the Article 10 of the ECHR leaves to the Contracting States a margin of appreciation. It is given both to the domestic legislator and to the judicial bodies that are called upon to interpret and apply the laws in force.²⁵ Consequently, the process of realizing a "uniform standard" of human rights protection must be gradual because the entire legal framework rests on the fragile foundations of the consent of the Member States. The margin of appreciation gives the flexibility needed to avoid damaging confrontations between the Court and the Member States and enables the Court to balance the sovereignty of Member States with their obligations under the Convention.²⁶

It gives a broad margin if the domestic authorities have respected procedural guarantees and balanced competing interests and fundamental rights diligently. Margin of appreciation is granted by the Convention, and ECtHR is empowered to give the final ruling on whether a restriction or penalty is reconcilable with freedom of expression.²⁷

2.2. Regulation under Russian legislation

The Constitution of the Russian Federation proclaims the Russian Federation as a democratic legal state in which the rights and freedoms of a man and a citizen are the highest value, and their recognition, observance and protection are the duty of the state.²⁸

Rulings of the Plenary Session of the Supreme Court of the Russian Federation are so called

"binding legal (procedural and substantive) tools" which explain and interpret the law to ensure its proper and cohesive application by the lower courts and are binding for judges.

Preamble of the Resolution № 3 of the Plenary Supreme Court of the Russian Federation of 24 February 2005 indicates that in the Russian Federation every person has the right to defend

23 Handyside v. The United Kingdom, para. 48.

24 Ibid.

25 Ibid

26 As an inherent and permanent phenomenon under the Convention, there has been developed a system of criteria for the application of the margin of appreciation doctrine, including the following ones:

the effective protection, inherent in the text, holds that, since the key function of the Convention is the effective protection of human rights rather than the enforcement of mutual obligations between states, its provisions should not be interpreted restrictively in deference to national sovereignty;

the principle of subsidiarity and review means that the main responsibility of ensuring the rights provided in the Convention rests with the member states, and the role of the Strasbourg organs is limited to ensure whether the relevant authorities have remained within their limits;

permissible interferences with Convention rights means that permitted infringements must be prescribed by a state’s law, pursue a legitimate aim and be necessary in a democratic society;

proportionality which requires that there be a reasonable relationship between a particular objective to be achieved and the means used to achieve that objective. Although the Court offers a margin of appreciation to the Member State and its institutions, the Court’s main role is to ensure that the rights laid down in the Convention are not interfered with unnecessarily;

the “European Consensus” standard as a generic label used to describe the Court’s inquiry into the existence or non-existence of a common ground, mostly in the law and practice of the Member States.

available at https://www.coe.int/t/dghl/cooperation/lisbonnetwork/themis/echr/paper2_en.asp

27 Thomas Kleinlein, Consensus and Contestability: The ECtHR and the Combined Potential of European Consensus and Procedural Rationality Control. European Journal of International Law.

28 The Constitution of the Russian Federation, adopted on 12 December 1993

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8 their honor and good name and that the freedom of the media is regulated by Article 10 of the Convention.²⁹

The constitutional right to freedom of thought and speech in Russia is comparable with the right to expression established by Article 10 of the ECHR and it is guaranteed by the Constitution of the Russian Federation.³⁰ Meanwhile, this article is one of the most difficult to analyze, as in addition to freedom of speech, it contains a number of rights and regulations that are closely related to freedom of speech, namely: the guarantee of freedom of thought,³¹ the prohibition of propaganda and agitation of a certain direction,³² the prohibition to force a person to express their opinions or refuse them,³³ the right to freedom of information,³⁴ as well as a guarantee of freedom of the media and the prohibition of censorship.³⁵ At the same time, the Constitution of the Russian Federation neither in the specified article, nor in other articles contains provisions disclosing the essence or content of freedom of speech, as well as the relationship of this right with other provisions of the Constitution listed above.

The Constitution of the Russian Federation stipulates that the human and civil rights are recognized and guaranteed in the Russian Federation. In accordance with generally recognized principles and norms of international law, they are directly applicable, determine the meaning, content and application of laws, the activities of the legislative and executive authorities, and local self-government and provided with justice.

From the moment of ratification of the ECHR in 1998, norms and principles, along with Article 29 of the Constitution of the Russian Federation, become the fundamental legal basis for the development of legislation including that on the press and broadcasting as well as new media outlets. In this regard, the Convention is the most effective of all the international treaties ratified and recognized by the Russian Federation. The high efficiency is ensure especially by the European Court of Human Rights, which is empowered to interpret the norms of the Convention.

With Russia's accession to the jurisdiction of the ECtHR, Russian judicial control mechanisms for the observance of human rights and fundamental freedoms received support in the form of international judicial control. Consequently, the competence of the Russian courts to consider relevant applications and the competence of the ECtHR to examine complaints of violations of fundamental human rights and freedoms are interrelated. This connection is based on the need to solve the single task of international and domestic legal proceedings - the protection of human rights and freedoms with the proper protection of public order.

Consequently, in matters relating to the legal status of an individual in the Russian Federation, decisions of the ECtHR are in fact becoming precedent. Given that Russia does not recognize a precedent as a source of law, it is necessary to determine accurately the place of the ECtHR decisions into the system of sources of Russian law for the purpose to exclude a possible conflict between the decisions of the ECtHR and the highest judicial bodies of the Russian Federation.³⁶ 3. Protection of Reputation

3.1. Regulation under Article 8 of the ECHR

Reputation is one of the most important arbiters of an individual’s fulfillment and a business’s profitability. It is important for individuals, because good reputation brings safety, friends, self- esteem, happiness, and money. Businesses with a good reputation make greater profits. The

29 Resolution of the Plenary Session of the Supreme Court of the Russian Federation of 24 February 2005 No. 3 Moscow "On Judicial Practice on Cases of Defence against Defamation of Character of Individuals and of the Business Reputation of Individuals and Legal Entities".

30 The Constitution of the Russian Federation. Art.29.

31 Id, para 1.

32 Id. para 2.

33 Id. para 3.

34 Id. para 4.

35 Id. para 5.

36 Z.M. Khatkova, Effect of the decisions of the ECtHR on the constitutional law of Russia

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9 Strasbourg Court has stipulated and constantly reiterates that reputation is protected by Article 8 of the Convention as part of the right to respect for private life.³⁷

For Article 8 to enter into force, an attack on a person’s reputation must reach a certain level of seriousness and must be done in such a way as to prejudice the personal enjoyment of the right to respect for private life.³⁸

It is underlined that in cases of defamation, while the right to freedom of expression is granted as a right expressly guaranteed by the Convention, the Court tends to considered the protection of reputation – the other competing interest in defamation cases – barely as a ground for permissible restriction of the right which is protected by Article 10. In other words, the protection of reputation, could be found as a justified interference to expression if it is necessary in a democratic society. The Court has not provided to the reputation an independent status of a competing right.³⁹

Indeed, the Convention does not expressly guarantee the right to protection of reputation.⁴⁰ Protection of reputation, together with protection of morals, is only directly indicated in Article 10 of the Convention as a justifiable ground for restricting the right to freedom of expression.⁴¹ Reputation has been often protected by the Court as a remedy, source in setting boundaries and limits to the protection of freedom of expression. Since, according to second paragraph of Article 10, the exercise of freedom of expression carries with it duties and responsibilities in a democratic society, the protection of the reputation is one of the reasons that are exhaustively listed in Article 10 for statutory restrictions on the abuse of freedom of expression.⁴²

Thus, the right to private life also covers the protection of reputation and honor if the attack on personal honor and reputation attains a certain level of gravity and causes prejudice to personal enjoyment of the right to respect for private life.⁴³

The Court has, to date, expressly left open the question of whether the private life aspect of Article 8 protects the reputation of a company. However, for the Court, under Article 10 the

"dignity" of an institution could not be equated to that of human beings.⁴⁴ 3.1.1. The Strasbourg Court approach to the protection of legal entities

An example of protecting the rights of a legal entity is the case "Kharlamov v. Russia".⁴⁵ The case concerned a civil action in defamation brought against Mr. Kharlamov, a university professor, by his employer, Orel State Technical University, after he expressed the view that the University’s governing body could not be considered legitimate due to shortcomings in the election procedure.

The domestic courts have focused their attention on Mr. Kharlamov’s description of the elected senate as illegitimate. Confining their analysis to the discussion of whether the University’s reputation had been damaged, they had considered his appraisal of the election procedure to be a factual accusation that had not been true and that had not been backed up by proof.

37 Axel Springer AG v. Germany (application no. 39954/08), para 83.

38 Ibid.

39 Speech by Mr Christos L. Rozakis, Vice-President of the ECtHR. Strasbourg, March 2003

40 Article 17 of (ICCPR): "No one shall be subjected to arbitrary or unlawful interference with his privacy, family, home or correspondence, nor to unlawful attacks on his honour and reputation".

Article 12 (UDHR): “No one shall be subjected to arbitrary interference with his privacy, family, home or correspondence, nor to attacks upon his honour and reputation".

41 See also Cariolou, Leto. The Right to Reputation under the European Convention on Human Rights. 2011.

42 Id. Page 5.

43 Päivi Korpisaari, Balancing freedom of expression and the right to private life in the European Court of Human Rights - application and interpretation of the key criteria, Article in Communications Law. 2017, 22(2), 39-50, page 39. See also White v. Sweden (application no. 42435/02) para 26.

44 Council of Europe. Guide on Article 8 of the European Convention on Human Rights. Page 38. See also Firma EDV für Sie, EfS Elektronische Datenverarbeitung Dienstleistungs GmbH v. Germany (application no. 32783/08), para 23; Kharlamov v. Russia (application no. 27447/07), para29.

45 Kharlamov v. Russia (application no. 27447/07).

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10 According to the judgments of domestic courts, Mr. Kharlamov publicly accused the University in a violation of applicable laws and in a dishonest act. As the ground for such resolution was taken the position that any negative appraisal of the activities of a legal entity affects its reputation and undermines it. It was added that activity of any legal entity can only be potentially successful if its business reputation in the eyes of other is maintained at a certain level.⁴⁶

The national courts established that, Mr. Kharlamov’s speech contained a statement of fact about the elected academic senate of University which was unlawfully elected and its decisions are unlawful.⁴⁷

The Strasburg Court pointed out that there was no evidence that the domestic courts performed a balancing exercise between the need to protect the University’s reputation and the applicant’s right to impart information on issues of general interest.

But in the Court's opinion, Mr. Kharlamov disseminated his personal value judgments regarding illegitimacy of the academic senate which were based on his own assessment.⁴⁸

The Strasburg Court stipulated that the domestic courts had thus failed to take into account the nature of the remarks made by Mr. Kharlamov, namely a value judgment with a sufficient factual grounding, or the specific features of academic relations.

In this case, the Court therefore held that the domestic courts had failed to strike a fair balance between the need to protect the University’s reputation and Mr. Kharlamov’s academic freedom to express his opinion about the institution or system in which he worked. The interference with Mr. Kharlamov’s right to freedom of expression had therefore not been

"necessary in a democratic society", in violation of Article 10.

In this remarkable case the Court stated "[that] the "dignity" of an institution cannot be equated to that of human beings".⁴⁹

In the case "Firma EDV für Sie, EfS Elektronische Datenverarbeitung Dienstleistungs GmbH v. Germany",⁵⁰ the applicant company was a profitable software enterprise that provided customer service for a database widely used by German medical practitioners. It distributed this software to, and maintained it for, about 400 medical offices in Bavaria.

In 1997, a journal for medical professionals "Medical Tribune" published an article warning of a technical security leak from the applicant company. Allegations were based only on the ground of its connection with a religious community called "Universelles Leben". Later, the representative of the Bavarian Protestant Lutheran Church issued a press release, where he warned of the "at least conceivable danger" that the applicant company might abuse its access to patient data and use it for the purposes of the religious community Universelles Leben. The representative of the Bavarian Protestant Lutheran Church gave an interview to an independent Bavarian radio station, confirming that he saw a risk to data security, but explicitly stating that neither he nor the "Medical Tribune" had alleged that the applicant company had abused its access to patient data in the past. Nonetheless, he considered the applicant company as a

"dubious organization" in view of its unusual views on the treatment of illnesses and called on practitioners to reconsider giving it access to patient data.⁵¹

As a result, the company that had licensed the applicant company to distribute and provide customer service for its software terminated their contract, citing the critical press. Finally, having thereby lost its main source of income, the applicant company discontinued its business.⁵²

46Kharlamov v. Russia, para 10.

47 Id, para 13.

48 Id, para 31.

49 Id, para 29.

50 Firma EDV für Sie, EfS Elektronische Datenverarbeitung Dienstleistungs GmbH v. Germany, Application no.

32783/08.

51 Ibid.

52 Id, para 8-9.

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11 The domestic courts dismissed the applicant company’s lawsuit, finding that the representative of the Bavarian Protestant Lutheran Church had not violated either the applicant company’s personality rights, or its rights concerning its business.

Additionally, it emphasized in the balancing of interests that the Bavarian Protestant- Lutheran Church had not pursued its own economic interests by their statements. Rather, they had spoken about a topic of substantial public interest, which concerned about 400 medical practices in Bavaria. It was noted that the effects of the press release had been severely negative for the applicant company, however, this had been the result of a debate, rather than pressure of any kind on the medical practices and patients concerned.⁵³

Already in this case, the Court has held that "the protection of a company’s reputation may be the legitimate aim of a restriction under Article 10 § 2 of the Convention".⁵⁴

For the purposes of the present application, the Court considered that it may leave open the question whether the reputation of a company falls under the notion of private life under Article 8 § 1, but, "having regard to the foregoing principles, it will start on the assumption that Article 8 applies".⁵⁵

One of the elements of particular importance for the Court’s determination was the distinction between statements of fact and value judgments. The representative of the Bavarian Protestant-Lutheran Church had pointed out that he did not previously allege that Universelles Leben had actually abused its data access and that it was his assumption. The Court considered that such negative value judgment as “dubious organization” had a sufficient factual basis in this case, had not been contested in the proceedings before the domestic courts, and was not abusive.⁵⁶ The Court found that the applicant company’s complaints did not disclose any appearance of a violation of Article 8 and must be rejected as manifestly ill-founded.⁵⁷

Regardless of the final decision, this case is very important since the court expressly designated that Article 8 could be applied for the protection of a company’s reputation as the legitimate restriction of the right to freedom of expression under Article 10§2 of the Convention.

In a well-known case "Steel and Morris v. the United Kingdom"⁵⁸ the applicants had been sued in defamation of McDonalds. Steel and Morris were associated with London Green peace that began an anti-McDonald’s campaign.

In ECtHR, Steel and Morris complained that the non-availability of legal aid, because of luck of money, infringed their right to a fair trial. So, two issues were decided by the ECtHR: 1) whether Steel and Morris had a right to legal aid for the cases under Article 6 of ECHR providing for the right to a fair trial; 2) whether the U.K. courts had violated Steel and Morris’ right to freedom of expression under ECHR Article 10.

In this case the ECtHR reaffirmed that in exercising its supervisory jurisdiction, the Court's task, is not to take the place of the competent national authorities but rather to review under Article 10 the decisions they delivered pursuant to their power of appreciation. "In doing so, the Court has to satisfy itself that the national authorities applied standards which were in conformity with the principles embodied in Article 10 and, moreover, that they relied on an acceptable assessment of the relevant facts".⁵⁹

The ECtHR recognized that the right of access to a court is not absolute and may be subject to restrictions, but those restrictions must pursue a legitimate aim and be proportionate to that aim. There had been an unacceptable inequality of arms. The Convention was intended to guarantee effective procedural rights.

53 Id, para 10-16.

54 Id, para 21.

55 Id, para 23.

56 Id, para 28.

57 Id, para 29.

58 Steel and Morris v. the United Kingdom(Application no. 68416/01)

59 Steel and Morris v. the United Kingdom, para 87. See also Hertel v. Switzerland (Application no. 68416/01), para 46.

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12 The Court expressly stated that the fact that the plaintiff is a large multinational company, should not be an obstacle and in principle deprive the company of the right to defend itself against defamatory allegations or entail that the applicants should not have been required to prove the truth of the statements made. In addition to the public interest, in open debate about business practices, there is a competing interest in protecting the commercial success and viability of companies not only for the benefit of shareholders and employees, but also for the wider economic good. The State therefore enjoys a margin of appreciation as to the means it provides under domestic law to enable a company to challenge the truth, and limit the damage of allegations which risk harming its reputation.⁶⁰ It is a State's right, according to a margin of appreciation principle, to decide whether to provide such a remedy to a corporate body.⁶¹

The court stated that, taking into account the right of companies to protect their reputation, and the obligation/burden assigned on the disseminator to proof and confirm information, domestic courts did not fully provide the procedural balance of the parties in the trial and "the lack of procedural fairness and equality therefore gave rise to a breach of Article 10 in the present case".⁶²

Finally, the Court decided that there has been a violation of Article 10 of the Convention, only because of the lack of procedural fairness in domestic courts and the disproportionate award of damages. But not because the Court's discerned of any principal reasons or grounds for the company to be avoided from obtaining legal protection and compensation for a damaged reputation.⁶³

It should be emphasized that when considering cases related to the protection of reputation, compliance with procedural rules can have a decisive impact.

3.2. Regulation under Russian legislation

Article 150 of the Civil Code of the Russia Federation provides, that "the life and health, personal dignity, personal immunity, honor and good name, business reputation, privacy... and the other non-material values belonging to a citizen from his birth or by virtue of law are inalienable and non-transferable in any other manner".⁶⁴

The right of individuals to receive protection of their honor, dignity and business reputation is their constitutional right as well as the business reputation of legal entities is one of the conditions for their successful business.⁶⁵ When resolving disputes relating to protection of honor, dignity and business reputation, courts should be governed not only by the rules of the Russian legislation but also take into account the legal position of the ECtHR expressed in its case law and concerning issues of interpretation and application of the Convention. The concept of defamation used by the ECtHR in its judgments is equivalent to the concept as it means in Article 152 of the Civil Code of the Russian Federation..⁶⁶

Defamation can be manifested in a violation of administrative law, consisting in the humiliation of the honor and dignity of another person, expressed in indecent form (insult), as well as in a violation of criminal law, consisting in the dissemination of knowingly false information defaming the honor and dignity of another person or undermining him reputation (slander). "If a subject opinion is expressed insultingly, denigrating the honor, dignity and business reputation of the claimant, the defendant may be required to pay moral damages for the insult to the claimant (Article 130 of the Criminal Code of the Russian Federation, Articles 150 and 151 of the Civil Code of the Russian Federation)".⁶⁷

61 Id, para 95.

62 Ibid.

64 The Civil Code of the Russia Federation. Art.150.

65Resolution № 3 of the Plenary Supreme Court of 24 February 2005. Section 1.

66 Ibid.

67 Id. Section 9.

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13 The responsibility for an insult that had previously been determined as punishable in accordance with Article 130 of the Criminal Code of the Russian Federation, ⁶⁸ was decriminalized and shifted to the Article 5.61 of the Code of Administrative Offences of the Russian Federation in December 2011. Previously, a criminal Article 130 for insulting provided for punishment up to restriction of liberty for a term of up to 1 year and for a public insult - up to 2 years.

Nowadays, insult that is the denigration of the honor and dignity of another person, expressed in indecent form shall be sanctioned by an administrative fine. The penalty increases when insult contained in a public speech, in a publicly performed work, or in mass media. Failure to take measures to prevent insult in a publicly or in the media also entails the imposition of an administrative fine as well.⁶⁹

When Russian courts see that impugned statements are mostly insult, swearing, they refuse to satisfy claims for the protection of honor and dignity on the basis of Article 152 of the Civil Code of the Russian Federation, justifying that insulting with swearing is not the dissemination of information defaming someone's honor and dignity of the plaintiff, but forms an independent corpus delicti in the form of insult, provided for in Article 5.61 of the Code of Administrative Offenses of the Russian Federation and are subject to administrative punishment in the form of an administrative fine.⁷⁰

The definition and responsibility for slander was established in Article 128.1 of the Criminal Code of the Russian Federation in 2012 after a short period of decriminalization of this violation.⁷¹

According to the law, slander, "that is the spreading of deliberately falsified information that denigrates the honor and dignity of another person or undermines his reputation", shall be punishable by a fine or by compulsory works.

The size of the punishment increases in cases when a slander:

- contained in a public performance or in a publicly displayed work, or in mass-media;

- disseminated using one's official position;

- is about someone, suffering from a disease that poses a danger to others, as well as defamation associated with the accusation of a person in committing a sexual offense;

- connected with the accusation of a person committing a grave or especially grave crime.⁷² It is interesting to note that slander is the only violation stipulated by the Russian Criminal Code, according to which acquittals are made several times more than convictions. As for the majority of democratic countries, this violation is not considered by their lawmakers as criminally punishable and, as a rule, is resolved in the framework of civil proceedings.

3.2.1. The right to compensation for moral / reputational harm

In its Resolution from December 2003 No. 508-O,⁷³ the Constitutional Court of the Russian Federation stipulated the possibility of causing moral harm to a legal entity, as well as the need to compensate such harm. The Constitutional Court built its findings on the basis of the provisions of para.7, Article 152 of the Civil Code, Part 2 of Article 45 of the Constitution of the Russian Federation (where everyone has the right to protect their rights and freedoms by all means not prohibited by law), article 41 of the ECHR, according to which a fair satisfaction should be afforded by the guilty state, including to the legal entity, as well as on the basis of the Judgment of the ECtHR of April 6, 2000 in the case of Comingersoll S.A. v. Portugal.⁷⁴

68 The Criminal Code of the Russian Federation No. 63-FZ of 13 June 1996. Article 130. "An insult, that is, humiliation of the honor and dignity of another person, expressed in indecent form...".

69 The Code of Administrative Offences of the Russian Federation. Article 5.61.

70 "Review of court practice in cases of disputes regarding the protection of honor, dignity and business reputation" , para 20, March 16, 2016.

71 The Criminal Code of the Russian Federation No. 63-FZ of 13 June 1996.

72 Ibid.

73 Resolution of the Constitutional Court of the Russian Federation of 04.12.2003 N 508-O.

74 Comingersoll S.A. v. Portugal, Application no. 35382/97. Judgment 6 April 2000.

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14 In above mentioned case, the Court stated that whether an award for non-pecuniary damage alleged by juristic persons should be made will depend on the exact circumstances of each case.⁷⁵ The Court pointed out that the possibility that a juristic person may be awarded compensation for non-pecuniary damage cannot be ruled out.⁷⁶ In the light of its practice, the Court cannot exclude the possibility that a commercial company may be awarded pecuniary compensation for non- pecuniary damage.⁷⁷ Account should be taken of the company's reputation, uncertainty in decision-planning, disruption in the management of the company (for which there is no precise method of calculating the consequences) and lastly, albeit to a lesser degree, the anxiety and inconvenience caused to the members of the management team".⁷⁸ In this connection, the Court established that the applicant company was left in a state of uncertainty and awarded to the applicant compensation in amount PTE 1,500,000 for the damage sustained.

In slightly more than one year after the Constitutional Court's Resolution form December 2003 No. 508-O, the Supreme Court of the Russian Federation in the section 15 of the Resolution of 24 February 2005 No. 3 stipulated that the rules, which are granting and governing compensation for moral harm in connection with the dissemination of defamatory information that discredits a citizen’s business reputation are also equally applicable in cases where such information has been disseminated in relation to a legal entity.⁷⁹

Content of the new clause 11 of Article 152 of the Civil Code has blocked the direct effect of the section 15 of the Resolution of the Supreme Court of 24 February 2005 No. 3 and excluded the possibility of compensation for "moral harm" to legal entities.

Moreover, it was perceived, that the elimination from Article 152 of the Civil Code of the Russian Federation norms on the possibility of recovering moral harm in favor of legal entities should put an end to claims containing such type of protection.

The only argument in favor of the possibility of collecting damage to the reputation of legal entities remained is the thesis of the Constitutional Court of the Russian Federation (Resolution from 2003)⁸⁰ that legal entities have the right to demand compensation for intangible losses even with the absence of such method of protection expressly provided in the law. If such a thesis is admitted as true, then it should be accepted, that the court has the right to satisfy suits containing claims for compensation of moral damage to a legal entity.

In this regard, the Resolution of the Supreme Court of the Russian Federation from 2015 is of particular interest.⁸¹ In related case, the arbitration courts of all three instances ignored the amendments made to Article 152 of the Civil Code of the Russian Federation in 2013, and, supporting the above mentioned position of the Constitutional Court of the Russian Federation,⁸² satisfied the legal entity claim of compensation for moral harm.

The Supreme Court of the Russian Federation recognized the indicated decisions as erroneous, and refused to satisfy the claim for compensation for the moral damage to legal entities.⁸³

The Supreme Court's legal position boiled down to the fact that from the direct content of Article 151 of the Civil Code⁸⁴ it follows that compensation for non-pecuniary damage is possible in cases of causing to a citizen non-pecuniary damage by actions that violate personal non-property rights or encroaching on intangible rights belonging to a citizen, or in other cases (directly) provided by law. By virtue of Part 2 of Article 1099 of the Civil Code of the Russian Federation, non-pecuniary damage caused by actions (inaction) that violate the property rights of

75 Id, para 32.

76 Id, para 34.

77 Id, para 35.

78 Ibid.

79 Resolution № 3 of the Plenary Supreme Court of 24 February 2005. Section 15.

80 Resolution of the Constitutional Court of the Russian Federation of 04.12.2003 N 508-O.

81 Resolution of the Supreme Court of the Russian Federation of 17 August 2015 N 309-ЭС15-8331.

82 Supra note 80.

83 Supra note 81.

84 Art. 151 of the Civil Code of the Russia federation.

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15 a citizen shall be compensated only in cases provided by law. Since the current legislation does not directly indicate the possibility for recovery of moral damage in favor of a legal entity, accordingly, there are no grounds for recovering compensation for non-pecuniary damage in favor of a legal entity.⁸⁵

By 2017, the Supreme Court of the Russian Federation has finally formulated its position regarding reputational harm to legal entities that is valid nowadays. Despite the prohibition of compensation for moral harm, compensation for reputational harm is possible in cases of diminishing the business reputation of legal entities.

In its Resolution of November 18, 2016, the Supreme Court of the Russian Federation has confirmed and motivated the possibility for compensation of reputational damages in favor of legal entities.⁸⁶

The Supreme Court indicated that the entry into force of the new wording of Article 152 of the Civil Code on October 1, 2013, which excluded the possibility of compensation for moral damage in case of derogation of the business reputation to legal entities, does not prevent the protection of the violated right by a claim by the legal entity of compensation for harm caused to its reputation.⁸⁷

In motivation for its findings, the Supreme Court again referred to the Resolution of the Constitutional Court of the Russian Federation N 508-O, which noted that "the absence of a direct indication in the law to the method of protecting the business reputation of legal entities does not deprive them of the right to submit claims for compensation for losses, including intangible ones, caused by derogation of business reputation, or intangible harm, which has its own content (different from the content of moral harm caused to a citizen), which follows from the essence of the violated intangible right and the nature of the consequences of this violation (clause 2 of Article 150 of the Civil Code). This conclusion is based on the provisions of Article 45 (Part 2) of the Constitution of the Russian Federation, according to which everyone has the right to protect their rights and freedoms by all means which are not prohibited by law".

It was explained, that harm, which could be caused to business reputation, should be understood as any derogation of reputation, which is manifested in any presence of a legal entity’s losses due to the dissemination of defamatory information and other adverse consequences. The harm could be expressed as a loss by the legal entity of a positive opinion about its business qualities in the eyes of the public and the business community; loss of competitiveness; inability to plan activities, etc.⁸⁸

At the same time, the Supreme Court of the Russian Federation set rather strict demands to facts and evidences for proving the right to claim of compensation for reputational harm.

The mere fact of the distribution of information defaming the business reputation of the plaintiff by the defendant is not enough to draw a conclusion about the damage caused to the business reputation and about the necessity to make a payment of a monetary compensation. The plaintiff must confirm:

– the existence of an already established reputation in a particular area of business relations (industry, business, services, education, etc.);

– the onset of adverse consequences for him as a result of the dissemination of defamatory information;

– the fact of loss or decrease of confidence to their reputation.

With the absence of such evidences, compensation will not be paid. Insufficiency of the above criteria does not allow a court to conclude the necessity in a monetary compensation, and does not provide an opportunity to determine the amount of fair compensation.⁸⁹

85 Supra note 81.

86 Resolution of the Supreme Court of the Russian Federation of 18 November 2016 N 307-ЭС16-8923.

87 Ibid.

88 Ibid.

89 Ibid.

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16 As a final position, this resolution has been additionally fixed in 2017 in Review of judicial practice of the Supreme Court of the Russian Federation No.1, where in paragraph 21 it is directly stated that "if the reputation of a legal entity is diminished, it has the right to protect its right by filing a claim for compensation for damage caused to the reputation of a legal entity".⁹⁰

Since the Civil Code of the Russian Federation ruled out the possibility for a legal entity to use such a method of protection as compensation for moral damage, but has not fixed the protection of reputation yet, in practice, refusals in protection of reputation to legal entities can continue. In my opinion, in order to solve this problem, the corresponding positive rule on compensation for intangible losses to legal entities should be directly included in the current legislation, and as an option, fixed in the Article 152 of the Civil Code.

4. Distinction between statements of facts and value judgments

Another problem, that directly affects on the right to protection of honor, dignity and reputation and which is carefully investigated in reputational cases, is the need for a clear distinction between the concepts of "statement of fact" and "value judgment".

A value judgment, opinion or belief is an expression of a person’s subjective views. They cannot be verified for validity. Therefore, they are not subject to judicial protection. In order to understand whether a statement is a value judgment, a judicial linguistic examination is necessary. Only a linguist can determine in what form the information is expressed. This is the key factor in the decision of the court. As a general rule, there will be no liability for a value judgment, opinion or belief. Responsibility may arise only for statements of fact that can be verified and do not correspond to reality.

The Strasburg Court regularly reaffirms that "a careful distinction needs to be made between facts and value-judgments. The existence of facts can be demonstrated, whereas the truth of value-judgments is not susceptible of proof. [As] regards value judgments this requirement is impossible of fulfillment and it infringes freedom of opinion itself, which is a fundamental part of the right secured by Article 10 of the Convention".⁹¹ So, the clear distinction between statements of facts and value judgments is a demand and the distinction is relevant from the position of the correct application of this rule in judicial practice.

However, the Court establishes that even where a statement amounts to a value judgment, the proportionality of any interference may depend on whether there exists a sufficient factual basis for the impugned statement.⁹²

While value judgments are not susceptible of being proven to be true or false, the underlying events and facts on which the judgment is built may be capable of being proven to be true or false. Following this approach in the Dalban case, the Court held that "it would be unacceptable for a journalist to be debarred from expressing critical value judgments unless he or she could prove their truth".⁹³

Thus, it could be concluded that, along with information, facts that could be verified, opinions, speculation, which cannot be directly considered as a subject for prove, under certain circumstances, could also be protected under Article 10.⁹⁴

Following the ECtHR case law the Russian courts provide defending of the reputation only if it is established that the disseminated information represents statements of facts.

Section 9 of the Resolution № 3 of the Plenary Supreme Court indicates that in accordance with Article 10 of the ECHR "[...] and the position of the European Court of Human Rights on consideration of cases of protection of honor, dignity and business reputation, courts should distinguish between assertion of fact that can be verified and value judgments, opinions, and

90 Review of judicial practice of the Supreme Court of the Russian Federation No. 1 (2017).

91Bychawska-Siniarska, Dominika, Protecting the right to freedom of expression, July 2017, page 78; see also Lingens v. Austria (Application no. 9815/82), para 46; Jerusalem v. Austria (Application no. 26958/95) para 42.

92 Jerusalem v. Austria (Application no. 26958/95) para 43.

93 Dalban v. Romania (Application no. 28114/95)

94 Bychawska-Siniarska, Dominika, Protecting the right to freedom of expression, July 2017, page 78.

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17 convictions that are not subject to judicial protection in the manner of Article 152 of the Civil Code of the Russian Federation, since, being an expression of a subjective view or opinion of the defendant, they cannot be verified as complying with reality".⁹⁵

Paragraph 6 of the Review of the Supreme Court of March 16, 2016 again reaffirms that, when considering cases on the protection of honor, dignity and business reputation, it must be borne in mind that the value judgments, which are contained in the disputed statements of the defendants, are not subject to judicial protection in accordance with Article 152 of the Civil Code of the Russian Federation, unless they are offensive in nature.⁹⁶

Consequently, even if information is disseminated as a value judgment of the author, but is offensive in nature, there is a basis for claiming protection of business reputation.⁹⁷

Information published in the media can be emotional in order to attract public attention to a specific problem, however, in carrying out journalistic activities, due respect must be paid to the business reputation of individuals and legal entities. Information, including negative, must be confirmed in reality. Confirmation can be obtained by any means available to the journalist in accordance with applicable law.⁹⁸

The Supreme Court indicates that when disseminated information can be brought to the attention of third parties in various ways (figuratively, allegorically, insulting, etc. e.), the courts, if necessary, should appoint a linguistic expertise or involve a specialist for consultation.⁹⁹

Damage to the business reputation of a legal entity may be caused by the dissemination of information regarding persons participated in its governing, executive bodies, owners, as well as employees of this organization. Since the executive body of the company acts on behalf of the company in civil turnover, its reputation is inevitably associated with the reputation of the company. Therefore, the derogation of the reputation of the governing, executive bodies of the company, in fact, diminishes the business reputation of the legal entity as a whole.¹⁰⁰

All value judgments can be divided into those which reflect an assessment of precisely the facts, events (information about which may be true or false) and an assessment of such qualities of the subject that are attributed exclusively subjectively and naturally should look differently in the eyes of different people.¹⁰¹

It is impossible, for example, to claim for the establishment of an absolute category of beauty, personal charm, ignorance, talent, courage, dignity etc.

At the same time, if a statement is made about a fact or someone’s behavior (dishonesty, committing a crime, an offense, misconduct), it certainly implies the possibility of finding evidence about it and analyzing the mentioned facts in reality. Then, such a judgment is already the result of reaction on such facts.¹⁰²

It is important to distinguish subjective thoughts and personal judgments from the dissemination of information about available for investigation facts, veiled, hidden with the help of introductory linguistic constructions as subjective assessments, such as "I consider that", "in my opinion", "there is a point of view", "it seems to me that" and so on.

One of the noteworthy cases of such a category is the PFC CSKA - Soviet Sport v. Vasily Utkin (N А40-76641/06-67-555), when the commentator rudely spoke about the contractual nature of the football CSKA - Rostov match, proving his point of view with using different logical methods (football terminology). The commentator concluded the following "I have strengthened my opinion and I consider this match to be contractual. Yes, by the way, not strange, but contractual". "These matches are negotiable, I think they are simply paid". The

95 Resolution № 3 of the Plenary Supreme Court of 24 February 2005. Section 9.

96 Presidium of the Supreme Court of the Russian Federation of 16 March 2016, para 6.

97 Resolution of the Supreme Court of the Russian Federation of 07 July 2017.

98 Ibid.

100 Id, para 12.

101 Parygina N.N. Protection of the right to business reputation of legal entities and individual entrepreneurs under the civil law of the Russian Federation, page 81.

102 Ibid.

Protection of the Reputation

Protection of the Reputation

Its Role and Balance with the Right to Freedom of Expression

Table of Contents