The recent publication of the 'Panama Papers' - 11.5 million files from offshore law firm Mossack Fonseca revealing the details of the use of offshore tax havens by numerous individuals (including several politicians) and companies poses some immediate legal implications.

Information in the Panama Papers has been reported on and published widely across the world. This article takes a look at the possible legal consequences in the UK that might arise from the publication of information gleaned from the Panama Papers, specifically in respect of defamation and breach of confidence claims.

Publications reporting on the Panama Papers will need to be cautious of the risk of defamation claims from individuals and companies, despite the fact that the Papers are legal documents and are very likely to be factual and therefore 'true'. It is important to note that the use of offshore tax structures is entirely legal and reasons for their use can be entirely legitimate, although they can also be used to further corruption (by assisting with money laundering, for example). Therefore, when reporting on the use of such structures it is important for a publication to be cautious before concluding that their use by a company or individual is corrupt.

Any allegation that an individual is corrupt or engaged in corrupt activities is very likely to be defamatory (although as per s.1 of the Defamation Act, it must also be capable of causing serious harm (to an individual) or serious financial loss (to a company)). If the allegations of corruption are true, then this will be a complete defence to a defamation claim. However, publications should be mindful that the defamatory sting of corruption can be imputed by the reader even if the word 'corruption' is not used. Whether a statement is defamatory is assessed by reference not to the literal words used by the publisher, but to the imputation or 'gist' of the statement as understood by the ordinary person in the position of those to whom the statement was published. The issue of tax avoidance is particularly sensitive in this respect. Whilst some tax structures are used to avoid tax legally, this can be confused by the ordinary reader as illegal tax evasion. By way of example, if a newspaper reports that an individual has used an offshore tax haven to 'hide' assets and avoid paying tax, the possible imputation of that publication is that the individual is engaged in illegal tax evasion and/or is engaged in corruption. The truth of the matter may be that the individual's tax arrangement is entirely legal, and he might have even declared its use to HMRC.

Publications should also be wary of linking individuals using offshore structures to other clearly corrupt or disreputable individuals. Such is the secretive nature of offshore arrangements that the motivations for establishing them can remain opaque on the face of available documents. Many reports have already honed in on individuals who have links to or have family connections to particular regimes and governments, such as the ruling Assad family Syria. However, publications should be cautious not to immediately infer that individuals linked or related to such regimes are necessarily engaged in corrupt activities. Merely because an individual is related to an obviously corrupt individual or regime, does not necessarily mean that they are carrying on corrupt services for that other individual or regime by use of an offshore tax structure. For example, if a publication reports that the Panama Papers reveal that a cousin of a well-known foreign dictator has been using an offshore company to purchase properties in London the potential imputation is that the individual has been doing this on behalf of the dictator. The truth may be that the individual has no involvement with the dictator beyond a family connection and the offshore arrangement was established for legitimate business purposes.

In addition to the defence of truth, publications can also argue that the matter on which it was reporting was in the public interest (s.4 of the Defamation Act). Corrupt activities are clearly in the public interest, but the issue is more nuanced in circumstances where the use of an offshore structure is legitimate. A publication could argue that even legitimate offshore structures are in the public interest as it is a means of tax avoidance and there is a current public debate as to whether such structures should be legal. In certain circumstances the defence can also be used to 'set the record straight' and correct misleading statements made by an individual or company. For example, if a politician has publicly stated never to have used an offshore tax avoidance scheme, but the acquired documents evidently contradict that statement, then this would be a matter of public interest.

There is also the issue of breach of confidence. The Panama Papers are legal documents which are almost all likely to be privileged and very likely to be confidential. Disclosing information from these documents may therefore breach the confidence of an individual or company. For the publisher, it is also a defence to a breach of confidence claim that the information which has been disclosed was in the public interest. Case law has established that public interest exists in circumstances where activities to which the documents relate are 'iniquitous' (which in Lion Laboratories v Evans was described as encompassing behaviour which was 'disgraceful' or 'criminal'). That clearly includes corrupt and illegal activities, but again the position is complicated when the activity is plainly legal. In the Spycatcher case, it was held that a broader approach to public interest should be taken rather than simply limiting the principle to 'iniquity'. Therefore, it could be argued that tax avoidance schemes fall within the public interest, but the principle nevertheless appears narrower than the public interest defence to a defamation claim. However, the 'setting the record straight' aspect of the public interest defence does also apply to breach of confidence claims.

An individual may also potentially bring a claim against a publication for misuse of private information on the basis that details published about their financial affairs gives rise to a reasonable expectation of privacy (which must then be weighed against the publication's right to freedom of speech under Article 10 of the Human Rights Act). However, such a claim would be unusual as disclosure of financial information fits more squarely within the ambit of breach of confidence rather than misuse of private information claims, which are typically used in respect of more 'personal' information such as sexual activity or medical details.

The Panama Papers detail some extremely complex financial arrangements and this will undoubtedly require circumspect and meticulous analysis before conclusions are confirmed and those conclusions are published. Not carrying out a substantial analysis before publication runs the risk of inviting legal claims.