New York times v. sullivan in European context: The optimal liability for libel from the perspective of behavioural law and economics

Abstract

The evolution of tort liability for defamation seems to create one of the most puzzling phenomena within the area of economic analysis of tort law. Whereas generally tort law evolves from negligence towards strict liability, the US Supreme Court established the platform for the revival of negligence-based tort law in case of libel and defamation. In Gertz v. Robert Welch (1974) the court explicitly advised for the application of the negligence rule if the plaintiff was a “private person”. The paper concentrates on these changes in two aspects: the relation between them and new British libel laws and the economic analysis of defamation within a context of European Convention on Human Rights (art. 10). Applying the standard rational choice theory various law and economics scholars proposed different alternatives based on the balance between public good (freedom of speech) and actual damage to the individual. The consideration having been already presented and discussed in law and economics literature concentrated on the internalization strategy, assuming full rationality and free access to information for agents (journalists, publishers) and adjudicators (courts and juries). I suggest that a more modern approach to judicial process requires the reference to cognitive limitations of adjudicators and systemic errors committed by judges. Generally the divergence between prediction and post diction may lead to a lower level of risk-aversion and a higher level of publication in case of standards such as in the Reynolds standard in English common law or the generally accepted balancing strategy applied by the ECHR in Bladet Tromso and Stensas v. Norway (1999).