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Open Justice Principle Trumps Reputational Damage

In the context of a commercial dispute, the Court of Appeal has robustly re-affirmed the ‘open court’ principle and ruled that the prospect of reputational damage to companies or individuals can only very rarely outweigh freedom of expression and the fundamental principle that justice must be done in public.

Two rival factions had instituted ‘unfair prejudice’ proceedings in relation to the same company under section 994 of the Companies Act 2006. The case involved a number of allegations of serious wrong-doing and one side in the dispute had sought an order that the matter be heard in private. It was submitted that a hearing in open court could result in serious damage to the reputations of companies and individuals, including two members of the Saudi Arabian royal family.

The High Court refused to direct that the case should be heard behind closed doors and, in upholding that decision, the Court of Appeal gave important guidance on the correct balance to be struck between individual and corporate privacy and reputational rights and the fundamental principle of open justice.

It was submitted that the High Court had treated that principle as ‘inherently superior’ to and meriting more weight than the right to respect for privacy enshrined in article eight of the European Convention on Human Rights. It was also argued that a hearing in open court would impact on the article six right to a fair hearing.

The Court accepted that the airing of grave allegations of commercial misconduct might cause embarrassment to certain parties and that public reporting of the opening of the case would expose them to significant risk of reputational damage.

However, ruling that those factors did not justify excluding the public and press, the Court observed that the veracity or otherwise of the allegations would be tested in evidence and that the affected parties would have the opportunity to achieve vindication on judgment being given.

The Court noted that, if the approach contended for by the appellants were correct, it could be extended to countless commercial and other cases in which allegations of serious misconduct were made. Such an erosion of the open justice principle could not be justified where adequate protection existed in the form of vindication of the innocent through the judicial process.