But Strasbourg judges say success fee recovery breached European convention
The recovery of after-the-event (ATE) insurance premiums in two successful claims against Associated Newspapers did not breach the European Convention on Human Rights but the recovery of success fees were a breach of the publisher’s article 10 freedom of expression rights, the European Court of Human Rights (ECtHR) ruled last week.
The court (pictured) said “the fact that ATE insurance covers more than just adverse costs does not alter the fact that, in contrast to success fees, it has the potential to offer considerable benefits to successful defendants who wish to recover their costs”.
The ruling came in two cases. In one, both the success fee and ATE premium were challenged in a case won by a suspect in the Manchester Arena 2017 terror attack who was never charged but was named by Mailonline. He won damages for breach of privacy in 2021.
ATE was the sole issue in the other case, as the claimant did not sign a conditional fee agreement (CFA). It arose from a claim by a clinical psychologist who was reported by the Mail on Sunday to have given credibility to false accusations of historic sexual abuse. The claim settled and the costs claim of £825,164 included an ATE premium of £335,160. Associated agreed to pay £709,095.
Associated argued that “threat of such liabilities was plainly capable of discouraging the participation of the press in debates over matters of legitimate concern” and therefore violated its article 10 rights.
While the recovery of success fees in publication proceedings ceased in April 2019, ATE premiums remain recoverable.
The ECtHR found there was insufficient evidence to enable it to depart from its findings in its 2011 judgment, MGN Limited v the United Kingdom, where it had found the CFA regime to be disproportionate to its original aim of ensuring the widest possible public access to legal services for civil litigation, including to people who would not otherwise be able to afford a lawyer.
So it held that the obligation on Associated Newspapers here to pay substantial costs, including success fees, had also been disproportionate.
But the requirement to cover the ATE premiums was not disproportionate. As a Libyan refugee who had lost his employment, there was nothing to show in the first case that the claimant could have paid Associated’s costs if his claim had been unsuccessful. The other claimant would probably not have been in a position to pay either.
Associated, by contrast, “was the publisher of a leading daily newspaper which could be expected to have insurance against exactly this kind of litigation”.
Moreover, it was “noteworthy” that the second claimant did not enter into a CFA, “thus absolving the applicant from any requirement to pay a success fee. Perhaps more importantly, this meant that… there was a strong incentive for her to control the incurring of legal costs on her behalf”.
Associated sought damages of £320,000 – the success fee that had been recovered – but the court said the case raised important questions about how to calculate pecuniary damages and further submissions from the parties were necessary.
But it ordered the UK to pay Associated €15,000 in costs and expenses.