'Libel tourism' and the war on terror

By Samuel A. Abady and Harvey Silverglate  |  November 7, 2006

AN IMPORTANT question will be argued tomorrow before the federal Court of Appeals in Manhattan: should American journalists who write about controversial issues be subjected to legal intimidation from abroad? More precisely, will American courts halt the growing practice of "libel tourism" whereby wealthy foreigners sue American writers and publishers in England, despite little chance of enforcing the judgment in this country?

Rachel Ehrenfeld, an adviser to the Defense Department and director of the New York-based American Center for Democracy , pioneered investigation into the financial roots of terrorism, first in her 1990 book "Narcoterrorism" and, most recently, in "Funding Evil -- How Terrorism is Financed and How to Stop It." She argued, controversially, that dollars from drug traffickers, corrupt state leaders, and wealthy Arab financiers, especially Saudis, fund terrorism.

One target of Ehrenfeld's work is Saudi billionaire Khalid bin Mahfouz, former owner of the National Commercial Bank of Saudi Arabia and former chief operating officer of the scandal-ridden Bank of Credit and Commerce International. In 1992, he paid $225 million after his indictment in New York for his role in the collapse of the Bank of Credit and Commerce International.

In "Funding Evil," Ehrenfeld reported that bin Mahfouz deposited "tens of millions of dollars in London and New York directly into terrorist accounts" and transferred some $74 million to the International Islamic Relief Organization and the Muwafaq Foundation run by Yasin al-Qadi, a US-designated terrorist.

Bin Mahfouz would have little chance to silence his accusers by a libel action in US courts. Under the Supreme Court ruling in New York Times v. Sullivan , public figures who sue media defendants must demonstrate that defamatory statements were "made with actual malice." The Sullivan case elevated free press over personal reputation except in egregious cases of reckless accusation.

No other nation goes as far to protect speech. Indeed, outside the United States, truth is often not a defense to allegations of defamation. The Sullivan standard is not accepted in Britain, Canada, Australia, or any of the 41 member states of the Council of Europe.

Bin Mahfouz and fellow libel tourists have made the English libel bar rich, leading the London Times to declare the United Kingdom the "libel capital of the Western world." English lawyers now refer to the "Arab effect" to describe the surge of English libel actions by wealthy, non resident Arabs accused of funding terrorism. This trend has produced a succession of rulings, settlements, and damage awards against English and American media defendants costing millions of pounds.

Bin Mahfouz has sued or threatened suit in England 33 times against those who linked him to terrorism. He runs a website boasting of his victories. The New York Times, The Wall Street Journal, and The Washington Post all have settled with him. The English court enjoined publication of "Funding Evil" in Britain and awarded bin Mahfouz 60,000 pounds ($109,470), even though the merits of his allegations were never tried.

Rather than confront bin Mahfouz on England's libel-friendly turf, Ehrenfeld sued him in a New York federal court seeking a declaration that his English judgment is unenforceable in the United States as repugnant to the First Amendment.

The English judgment has impaired her ability to find publishers for her other work. Remarkably, the district court dismissed her case, ruling in effect that Ehrenfeld must await legal action in the United States by bin Mahfouz to enforce the English judgment before raising her First Amendment defense. However, his lawyers have declared he does not intend to enforce his judgment in this country.

Writers are now subject to intimidation by libel tourists. Little wonder that the American Society of Newspaper Editors, the Association of American Publishers, and 14 other media groups have filed a "friend of the court" brief to support Ehrenfeld's quest to raise her First Amendment defense now. Until she is able to do so, she will have problems finding American publishers willing to risk publishing her research and writing.

The late Supreme Court Justice Louis Brandeis said that "freedom to think as you will and to speak as you think are means indispensable to the discovery and spread of political truth." Investigative reporters cannot play their vital roles without support from our courts to prevent, in Brandeis's words, "silence coerced by law." We hope the Court of Appeals will agree.

Samuel A. Abady and Harvey Silverglate are civil liberties and criminal defense lawyers in New York and Massachusetts, respectively.