Norwich Union test case forces urgent anti-libel policy rethink

Implement a corporate electronic mail policy today or face costly consequences.

That's the message from solicitors Field Fisher Waterhouse, in the wake of a landmark libel case which saw Norwich Union facing a u450,000 bill for damages.

Norwich Union was forced to settle with health insurance competitor Western Provident and pay damages after it admitted staff had libelled the company on the internal email system.

Nick Lockett, a member of the Internet Law Group at Field Fisher Waterhouse, said: "Some of the risks can be minimised by ensuring that staff comply with a corporate policy governing precisely how and when email may be used," he explained.

Lockett said the emails in this case occurred before the 1996 Defamation Act and that there could be a defence if a company had instituted an email policy after that date.

By establishing that employees' communications were outside of their employment contract and that policy, employers may be able to escape liability.

In Norwich Union's case, a statement in court on 17 July said that, in mid-1995, rumours spread around the insurance industry that Western Provident Association was insolvent and being investigated by the Department of Trade and Industry.

"These rumours were disseminated by some of Norwich Union's staff through its internal email system.

"Norwich Union now accepts that this was wrong - that there was no truth in any of the allegations," the statement read.

Following the settlement, Norwich Union's counsel said it "has made every effort to ensure that such unacceptable practices do not recur."