Case Summary and Outcome

The European Court of Human Rights found no violation of a Latvian bank chairman’s right to freedom of expression in a case where he was ordered to pay damages for defaming the former president of the bank. The chairman had produced an internal report that found that money had been paid to an advertising agency without supporting documents, and he made comments to the press that implicated that the former president had been involved in this misappropriation of funds. Two audits were subsequently carried out at the bank that concluded that there were no irregularities concerning payments to the advertising agency. The chairman was sued for defamation by the former president and was ordered to pay approximately 14,000 euros in damages. During the domestic proceedings, the chairman admitted that his comments to the press were wrong. The European Court of Human Rights found that the chairman’s initial report and allegations to the press did not have a sufficient factual basis and that he had overstepped the limits of acceptable criticism in relation to the former president of the bank. The European Court took into account, among other things, the chairman’s position at the bank and the fact that the press could rely on such a person’s credibility when reproducting his allegations. The Court concluded that the Latvian courts had struck a fair balance between the right to freedom of expression and the right to reputation and, therefore, found no violation of Article 10 of the European Convention on Human Rights (right to freedom of expression).

Facts

The case concerned the chairman of the board of a Latvian bank, Mr. Ģirts Rungainis, who had presented an internal report to the board in September 2002. This report was based on information from the heads of the marketing and economics departments of the bank and it concluded that substantial money had been paid to an advertising agency between 2001 and July 2002 without any supporting documents. This conclusion raised suspicions that the funds had been misappropriated, particularly since the advertising agency receiving the funds went on to provide certain advertising services for the political party of the former president of the bank who had stepped down in January 2002 to run for parliament.

Between August 2002 and May 2003, Neatkarīgā Rīta Avīze (“NRA”), a leading Latvian newspaper, published a series of articles based on statements made by Mr. Rungainis. These articles alleged that the bank made transfers of  large sums of money without any documentation in order to finance advertising and marketing activities. In these articles, Mr. Rungainis was quoted as saying: “[t]his is money that has been stolen from the shareholders” and “[i]t is possible that this is the money that provided the foundation for the Latvia’s First Party’s sizable advertising campaign.” [para. 15]

Following his report, on October 2, 2002, the bank’s supervisory board ordered several internal and external audits to verify Mr. Rungainis’ findings. Both audits concluded that there was no evidence that payments had been made for services or goods that had not been received or that the payments had exceeded the value of the services received.

On July 28, 2003, A.L. lodged a claim against Mr. Rungainis and the publishers of NRA seeking compensation and the retraction of a total of thirty-one allegedly defamatory articles. He argued that Mr. Rungainis had provided false information to NRA, which had formed the basis of some of these articles. Before the first-instance court, Mr Rungainis admitted that the information provided to NRA on the misappropriation of funds had been wrong, and he apologized to A.L. and the journalists. The court dismissed the defamation charges against Mr Rungainis and found that the articles had reflected his personal opinion about the functioning of the bank and its management.

The appeal court reversed this decision and found Mr. Rungainis liable for disseminating false information. The court held, among other things, that Mr. Rungainis had provided the information to NRA journalists and, therefore, had to bear responsibility for it. It noted that this information had not corresponded to the facts and that this had been acknowledged by Mr. Rungainis himself during the hearing before the first-instance court. The appellate court held that the journalists did not have a responsibility to verify the accuracy of the information provided, since the status of Mr. Rungainis as chairman of the supervisory board of the bank had created a legitimate expectation that the provided information was correct. It also reasoned that, even though A.L. was a member of parliament and should tolerate a greater degree of criticism, the serious and false allegations in this case had offended his honor and dignity. The court ordered Mr. Rungainis to pay 10,000 Latvian lats (approximately 14,000 euros) to A.L.. The Senate of the Supreme Court subsequently upheld the appellate court’s decision.

Relying on Article 10 of the European Convention on Human Rights, Mr. Rungainis complained that the defamation judgments against him amounted to an unjustified interference with his right to freedom of expression. He argued that the judgments were disproportionate because (i) his allegations contributed to a debate of general interest and were made on the basis of his internal report, (ii) A.L. was the subject of regular critical reporting and was a controversial figure, and (iii) the courts did not give any reasons supporting the quantum of the defamation award made against him. The Government of Latvia argued, among other things, that Mr. Rungainis’ allegations fell outside the limits of acceptable criticism and that he had not acted in good faith.

Decision Overview

The European Court of Human Rights (Court) began by noting the common ground between the parties, namely that the award of damages amounted to an interference with Mr. Rungainis’ right to freedom of expression and that this interference was “prescribed by law” and had pursued the legitimate aim of protecting the rights of others (the reputation of A.L.).

It was then left to the Court to establish whether the interference was “necessary in a democratic society”. The Court accepted that the allegations were made in the context of a public debate prior to parliamentary elections and concerned a politician running for office in those elections. However, the Court observed that the crux of the case was on the question of whether Mr. Rungainis’ allegations of undocumented advertising and marketing expenses at the bank constituted statements of facts or value judgments. While the existence of facts can be demonstrated, the truth of value judgments is not susceptible of proof. Nevetherless, according to the Court’s case law, value judgments must still have a sufficient factual basis.

The Court considered that some of Mr. Rungainis’ assertions could be regarded as constituting value judgments, but he also made pronouncements that were statements of fact susceptible of proof. Regardless, it was for the Court to consider whether there was at least a “sufficient factual basis” for Mr. Rungainis’ allegations. The Court noted that the reasonableness of efforts made to verify the accuracy of information disclosed must be determined in light of the situation as it was at the time when the statement was made. It was taken into account that Mr. Rungainis’ allegations were based on his initial report that was presented to the supervisory board and was prepared using internal information from the marketing and economics departments. His personal findings about the undocumented advertising and marketing expenses made by the bank were presented to the supervisory board and later reported to the journalists who published the news articles. Furthermore, Mr. Rungainis was directly quoted and referenced as the source of information. The Court also found that his statements contained serious allegations concerning A.L..

The Court went on by saying that what was at issue in the present case was whether Mr. Rungainis had exceeded the limits of acceptable criticism when commenting on his allegations to the journalists. The Court reiterated that politicians must tolerate a greater degree of criticism. Nevertheless, the Court said that in light of “the consequences that serious allegations of misconduct may have on public opinion and, potentially, on the results of the elections, ‘duties and responsibilities’ inherent in freedom of expression require particularly close scrutiny as to whether there was a sufficient ‘factual basis’ for such serious allegations”. [para. 59]

The Court took several elements into account that called into question how Mr. Rungainis acted when speaking with the journalists, particularly given his position, his knowledge, and the point in time at which he made his allegations. Firstly, the Court reasoned that Mr. Rungainis must have been aware of his status as a public official and the fact that, under domestic law, the journalists could rely on the credibility of his statements. Secondly, the Court noted Mr. Rungainis had formed his views concerning undocumented advertising and marketing expenses after consulting the heads of the marketing and economics departments, but he did not solicit any relevant information from the internal audit department before giving information to the press. Consequently, it found that Mr. Rungainis had knowingly disclosed unverified information to the journalists. Thirdly, the Court took into account the timing at which he made the comments. They were made during the month preceding the elections and, therefore, were capable of carrying a certain weight on public opinion about the newly established party and A.L as one of its leaders. The Court further added that “given [ Mr. Rungainis’] position at the Bank and the nature of his allegations, the Court does not consider that [Mr. Rungainis] could rely on the degree of exaggeration or even provocation that can usually be used in the exercise of freedom of expression in the context of a political debate. […] Therefore, given the circumstances of the case, the need for a sufficiently accurate and reliable factual basis was particularly relevant.” [para. 63] Finally, the Court criticized Mr Rungainis for not having taken any step to remedy the situation and retract his statements after the results of the internal and external audits were made available to the supervisory board.

In light of the foregoing, the Court found that Mr. Rungainis’ report and allegations contained no sufficient factual basis and he had consequently overstepped the limits of acceptable criticism in relation to A.L.. It followed that the interference with Mr. Rungainis’ right to freedom of expression was supported by relevant and sufficient reasons and that the Latvian authorities had struck a fair balance between freedom of expression and A.L.’s interest in protecting his reputation. Therefore, there was no violation of Article 10 of the Convention.