The report comes on the same day that Lord McNally reaffirmed his commitment to reforming libel law

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The Alternative Libel Project has published a report calling for a series of steps to be taken to reduce "eye-popping costs" in libel cases, including encouraging the use of "alternative methods of dispute resolution" (ADR) and penalising those who refuse.

The project, which is run by English PEN and Index on Censorship, two of the bodies involved in the Libel Reform Campaign, has spent the past year looking into "alternatives to resolving libel claims through the High Court" and as a result "recommends the wider use of quicker and cheaper methods, such as mediation, arbitration and early neutral evaluation".

"The report concludes that courts should encourage parties to use alternative forms of dispute resolution and penalise those who unreasonably refuse to do so.

"Alongside this, the government should give courts the mandate to manage the evidence and argument allowed in defamation cases in a robust manner. It should also introduce rules enabling a hearing to determine the meaning of the alleged defamatory words to be determined independent of a full claim for libel."

The report was published on the same day as Lord McNally addressed a seminar to reaffirm the commitment to reforming libel law.

In his speech McNally added that he believes the "package of measures will help to reduce the cost and length of proceedings and lessen the likelihood of costs".

Speaking to at the seminar Helen Anthony, lawyer for the Alternative Libel Project, said the matter of costs is "at the heart of the issue".

"If a person can't afford to take a case to court it doesn't matter how perfect the law is - they won't be able to enforce the rights the law gives them."

She added that in defamation "it is very important that costs protection is available for either party" as there can be "different inequalities of arms".

"Defamation [cases] can either have a big defendant and a small claimant, or you could have a small defendant and a big claimant."

In a release Jonathan Heawood, director of English PEN added that "procedure and costs rules need to change for defamation claims".

"There is no good reason why a libel trial should ever cost more than the average house price in the UK. Costs of this level are still beyond the means of most people in this country – hence our other recommendations - but it would mark a massive reduction on today's eye-popping costs."

In the report the project outlines the different forms of ADR which could be considered, including mediation, which it claims "has a success rate of more than 90 per cent in libel actions".

Other methods include arbitration and Early Neutral Evaluation (ENE) which, according to the report, "allows judges to give an opinion on the merits of a case on the basis of a short and straightforward hearing", and could help with reaching settlements.

The campaigners call on the government to "promote the routine use of ADR as well as ensuring the court process is accessible and the court takes action to redress any inequality of arms between the parties".

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