Andrey Mikonin, lawyer, partner of S&K Vertical law firm, took part in a panel discussion devoted to protection of business reputation

1 November 2010

Unprotected Reputation

It is virtually impossible to protect business reputation at Russian court.

In Russia it is virtually impossible to prove that one or another publication in mass media or massive information attack through mass media caused damage to company image. Maximum that lawyers protecting rights of those who were affected by actions of journalists manage to achieve is to stop the attack under the threat of initiation of a criminal case or filing a major action. It is possible to make the defendant compensate for damages, but in the best case the amount will only cover legal expenses. The legislators do not hurry to intervene in the situation. For example, the Supreme Arbitration Court of the Russian Federation does not think it is necessary to give explanations with regard to court practice in suits relating to protection of business reputation at all.

Participants of the panel discussion organized in the middle of October by RBC media holding talked about methods of protection against insults and a flow of unverified information distributed by mass media as well as about legislative tools which can be used by lawyers while protecting their clients against attacks of journalists.

Partly, speech of Vasily Vitryansky, famous lawyer, deputy chairman of the Supreme Arbitration Court of the Russian Federation, who lately stated that the Supreme Court would not give explanations of actions relating to infliction of damage to reputation, became the reason for the meeting. “Reputation damage means that nothing needs to be proved at all. Any compensation can be awarded as you wish,” Mr. Vitryansky says. In his opinion, if business reputation is impaired, the affected party shall recover damages. Herewith, there is practice of such cases, that is it is possible to achieve success in such proceedings, deputy chairman of the Supreme Arbitration Court of the Russian Federation says.

However, according to Andrey Mikonin, partner of S&K Vertical, there are very few successful cases relating to protection of business reputation. It is explained by the fact that, according to the current practice of Russian courts, it is virtually impossible to bring a promising action in this regard if an author uses such figures as metaphor, rhetorical questions, etc. instead of express and direct statement. It is very problematic to separate an individual phrase, statement containing discrediting information for distribution of which it is possible to claim compensation at court when the publication on the whole is aimed at humiliation of honor and dignity of a certain person. Despite explanations given by the Supreme Court in this regard this June, the court often views not the essence of a statement, publication, etc., but the form in which the statement is expressed, Andrey Mikonin says.

There are also problems concerning delineation of jurisdiction upon consideration of disputes challenging false information as a result of which the plaintiff may learn that it had chosen inappropriate court for protection already after review of evidence that made it clear, for example, that reputation of the person was impaired but not as the entrepreneur. There are also examples of refusal to protect the person against insults if it does not apply for bringing the offender to criminal responsibility. “The offended cannot be refused protection if it does not need the judgement, it considers compensation for moral damage to be sufficient and efficient,” Mr. Mikonin says. “In practice of criminal law, in its turn, it is possible to obtain a judgement, but it will be made only in case of obvious abuse when all dictionaries consistently interpret this statement as an abuse.”

At the same time lawyers pay attention to the fact that the European Court of Human Rights (ECHR) often deals with the problem of reputation damage. “The ECHR repeatedly stressed that it is possible to bring to responsibility for an opinion that is not based on any factual grounds,” Vadim Perevalov, junior lawyer of Mannheimer Swartling, says. “There shall be preconditions for forming public opinion. If you simply form the opinion from nothing, it is punishable,” he thinks. “The European Court of Human Rights thinks that protection of the right to fair name shall be direct, that is it shall depend on each specific case and be clarified proceeding from circumstances of the case including identity of the offended whose dignity is affected and the specific situation rather than on the grounds of a detailed list of bans for mass media and formal analysis of an extract from a vast publication,” Andrey Mikonin adds.

Experts are also skeptical about proposal of Mr. Vitryansky concerning recovery of damages in case of infliction of damage to reputation. “Let us say, information about a company discrediting its business reputation was distributed. Management of the company is not invited to business conferences, etc. any more,” Inna Vavilova, managing partner of Prime Advance, speculates. However, the affected company cannot declare that it sustains direct material damage as a result of it. “The affected party is forced to prove that impairment of its business reputation entails any material damage,” she adds. “But how it can be done when, according to Mr. Vitryansky, the company does not experience moral suffering that can be subjectively evaluated by the court.”

Ekaterina Sizova, lawyer of Egorov, Puginsky, Afanasyev and Partners law office, admits that in Russia there are a lot of gaps in legal regulation of the institute of protection of good reputation, especially as related to protection of business reputation vitiated on the Internet. However, if we look at the law and court practice of foreign countries and the USA, in particular, it may be noted that it considerably changes every year. “Due to fast development of electronic technologies, Internet in the absence of generally recognized world experience and established court practice, it is really difficult and even “harmful” for the Russian legislator to bridge some existing gaps by mandatory provisions,” she says.

In the absence of legislative tools lawyers have to independently search for a formula to control information attacks though mass media. “We brought actions against mass media with regard to a case for protection of products of inventor Victor Petrik. Rather large amounts confirmed by an expert opinion which are proportionate to annual income that was estimated but not earned were stated in them,” Andrey Mikonin says. “Having analyzed such actions, many mass media stopped to publish information impairing honor and dignity.”

It is not improbable that legal culture of business in Russia together with law enforcement practice have not yet reached the level at which companies will efficiently protect not only their property but also their reputation in a judicial proceeding. In future everything can change. “In the past legal counsels solved such legal problems as establishment of validity and effectiveness of supply contracts. Now they find methods to restructure pledges, sureties, to control bankruptcy in a profitable way. Then, they may decide how to protect the right to fair name and favorable environment. Meanwhile we need to head for it,” Andrey Mikonin concludes.

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