The British media won the freedom to publish allegations about public figures free from the threat of libel laws in a landmark House of Lords ruling today.

In a ground-breaking unanimous judgment, the law lords ruled in favour of a public interest defence that brings English law more into line with the freedom enjoyed by the US media.

In future, journalists will be free to publish material if they act responsibly and in the public interest and they will not be at risk of libel damages even if relevant allegations later prove to be untrue.

The law lords, Britain’s top judges, said that the media was entitled to publish defamatory allegations as part of its duty of neutral reporting of news, or if it believed them to be of substance and they raised matters of public interest.

The ruling came in an appeal by the Wall Street Journal Europe against a High Court decision, backed by the Court of Appeal, that it should pay £40,000 damages to a billionaire Saudi car dealer, Mohammed Jameel, whose family owns Harwell Motors in Oxford.

The story, published in February 2002, said that bank accounts associated with a number of prominent Saudi citizens, including Mr Jameel’s family and its businesses, had been monitored by Saudi authorities at the request of US authorities to ensure no money was provided intentionally or knowingly to support terrorists.

Lord Hoffman, giving the lead judgment, said that the article was a perfect example of journalism for which the public interest defence should be available.

It was for judges to apply the public interest test but that publication easily passed that test, he said. Its thrust was to inform the public that the Saudis were cooperating with the US Treasury and monitoring accounts. "It was a serious contribution in measured tone to a subject of very considerable importance."

It could not be proved true because the existence of covert surveillance would be impossible to prove by evidence in open court. But that did not mean it did not happen.

The newspaper was entitled to report even serious defamations against individuals, so long as they "made a real contribution to the public interest element in the article".

The ruling also said that judges, with "leisure and hindsight" should not second-guess editorial decisions made in busy newsrooms.

The key test was whether a media organisation or newspaper acted fairly and responsibly in gathering and publishing the information, the judges said.

If the reporter and editor did so, and the information was of public importance, then the fact that it contained relevant but defamatory allegations against prominent people would not permit them to recover libel damages.

Baroness Hale of Richmond in her judgment said: "We need more such serious journalism in this country and our defamation law should encourage rather than discourage it."

Geoffrey Robertson, QC, author of Media Law, the standard textbook, who argued the case for the Journal, said: "The decision provides the media in Britain with an increased freedom to publish newsworthy stories.

"This is not a licence for irresponsible journalism. It frees investigative journalism from the chilling effect of libel actions, so long as the treatment is not sensational and the editorial behaviour is responsible.

"It will enable, and indeed encourage, editors to place more information into the public domain than at present.

"The decision is an important step in moving freedom of speech closer to that enjoyed by the US media under the First Amendment."

Dan Tench, a media partner at Olswang, said: "The judgment has enormous significance for serious journalism. Previously, the focus of libel hearings defended on the basis of the Reynolds defence was always on the newspaper, which faced an uphill struggle to demonstrate that it had acted responsibly.

"But following today’s ruling, it seems that as long as a publisher can show that it was writing serious journalism that engages the genuine public interest and so deserves to be protected, the focus will shift onto the claimant, who will need to prove not only that there were serious defects in the way the article was put together but also that those defects realistically led to the article as published being unfair."

Mr Jameel issued a statement today emphasising that he had only ever been interested in clearing his name.

Mr Jameel, whose £5.4 million gift saw the opening last week of the Victoria and Albert Museum’s new gallery of Islamic Art, said: "What the Wall Street Journal wrote in February 2002 was that the bank accounts of the ALJ Group were being monitored at the request of the US authorities.

"That was not true. Mr Justice Eady and the Court of Appeal ruled that I was libelled. The House of Lords ruled that I was not because it was reasonable for the Wall Street Journal Europe to print something that was false. So be it. I was only ever interested in proving that the allegations were untrue."

Read more lawyers' reactions here.

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