State bodies cannot protect reputation through defamation lawsuits in the same way as private individuals — Supreme Court

The limits of permissible criticism regarding a state authority are significantly broader than those for a private individual, and lawsuits by such bodies for defamation may have a chilling effect on freedom of speech and public oversight of the use of budget funds.

This conclusion was reached by the Supreme Court sitting as a panel of judges of the Second Judicial Chamber of the Civil Cassation Court.

Case summary

In case 357/1235/22, a special state body, which is the main administrator of budget funds, filed a lawsuit seeking to refute information published by a private individual and a public organization on the Internet. The plaintiff argued that the data about the financial results of the subordinate institution’s activities were unreliable due to the use of incorrect terminology. According to the state body, such publication discredits it as a management body and undermines the authority of the state.

The court of first instance, whose decision was upheld by the appellate court, satisfied the claim, reasoning that the claims were justified and proven.

The Supreme Court’s Civil Cassation Chamber overturned the decisions of the lower courts and dismissed the claim, making the following legal conclusions.

According to part 1 of Article 94 of the Civil Code of Ukraine, a legal entity has the right to the inviolability of its business reputation, the secrecy of correspondence, information, and other personal non-property rights that may belong to it. The personal non-property rights of a legal entity are protected in accordance with Chapter 3 of this Code.

Defamation of the business reputation of a business entity (entrepreneur) is the dissemination in any form of false, inaccurate, or incomplete information that discredits the manner of conducting or the results of its economic (entrepreneurial) activity, thereby reducing the value of its intangible assets.

The courts established that the plaintiff is a special state body, which is the main administrator of budget funds. At the same time, the published information that is the subject of the dispute concerned another legal entity financed by the plaintiff.

Supreme Court conclusions

The Civil Cassation Chamber of the Supreme Court noted that the mere fact that the plaintiff finances another legal entity (institution) and performs certain management functions regarding this entity is not a basis for concluding that the contested information violates its non-property rights (damages its business reputation as a business entity).

According to part 4 of Article 32 of the Constitution of Ukraine, everyone is guaranteed judicial protection of the right to refute false information about themselves and their family members and the right to demand the removal of any information, as well as the right to compensation for material and moral damage caused by the collection, storage, use, and dissemination of such false information.

According to Article 34 of the Constitution of Ukraine, everyone is guaranteed the right to freedom of thought and speech, to freely express their views and beliefs. Everyone has the right to freely collect, store, use, and disseminate information orally, in writing, or by other means of their choice.

Everyone is obliged to strictly comply with the Constitution and laws of Ukraine, not to encroach on the rights and freedoms, honor, and dignity of others (Article 68 of the Constitution of Ukraine).

According to part 4 of Article 10 of the Civil Procedure Code of Ukraine, the court applies the Convention for the Protection of Human Rights and Fundamental Freedoms of 1950 and its protocols, the consent to the binding nature of which was given by the Verkhovna Rada of Ukraine, and the practice of the European Court of Human Rights as a source of law when considering cases.

Moreover, the cassation court drew attention to the fact that in the decision of March 15, 2022, in the case "OOO Memo v. Russia," the European Court of Human Rights explained under what conditions it is appropriate to examine in detail whether the contested interference pursued a legitimate aim of "protection of the reputation of others" when the interests of a state body are involved. The ECHR also emphasized that the limits of permissible criticism regarding a state authority are broader than those for a private individual (citizen) or even a politician.

In this case, the ECHR distinguished state enterprises involved in economic activities from authorities vested with state powers. The latter are funded by taxpayers and exist to serve society, therefore they do not have a legitimate reputational interest in the context of defamation lawsuits.

The Civil Cassation Chamber of the Supreme Court stated that the aforementioned conclusions of the ECHR were ignored by the lower courts, which failed to consider that, given the specifics of a state body, defamation disputes raised on behalf of a legal entity exercising state power cannot be regarded as pursuing the legitimate aim of protecting the reputation of others within the meaning of paragraph 2 of Article 10 of the Convention, and therefore reached an erroneous conclusion about the validity of the claim.

Subscribe to our Telegram channel t.me/sudua and to Google News SUD.UA, as well as to our VIBER and WhatsApp pages, and follow us on Facebook and Instagram to stay informed about the most important events.