A LANDMARK e-mail libel settlement should set alarm bells ringing in all multinational companies and firms using internal e-mail systems, according to an Internet law expert.
In an out of court settlement, Norwich Union recently paid £450,000 to Western Provident for circulating untruths on its internal e-mail system about Western Provident's alleged financial problems.
Nick Lockett, in-house barrister at Field Fisher Waterhouse's IT, Internet and digital media department, warned that the settlement had "massive implications for most companies which have internal bulletin boards" and that it is causing "worry" in the City and multinational companies.
It raised concerns about company chiefs' vicarious responsibility for employees who make defamatory statements on internal mail systems and about how much monitoring of internal communications systems should be carried out, said Lockett. He said he had already been contacted by several companies seeking advice.
He added that a number of companies had also approached Field Fisher Waterhouse for advice after hackers hacked into their web sites and left messages threatening to inject libellous material into their communications systems.
"What constitutes reasonable care and whether it is feasible to check all e-mails when there could be thousands of messages passed each day, is a big worry for companies," said Lockett.
He stressed the importance of implementing a corporate policy governing how and when e-mail should be used. Staff should also be provided with appropriate training in libel to minimise the legal risk.
Lockett said the Defamation Act 1996, which came into force after the libellous Norwich Union e-mails were sent, might provide employers in similar situations with a defence.
It would allow employers to show that they were not responsible for a member of staff's e-mail by establishing that the communication was outside the scope of their employment as shown by the company's corporate policy.
See analysis, page 10.