The press industry’s consumer complaints body, IPSO, has announced a new “compulsory” arbitration scheme for national newspapers. This is the third version of the IPSO arbitration scheme. The first two versions have had no takers and the third is unlikely to be any more successful.

The announcement comes a few days before a Parliamentary vote on a data protection version of section 40 of the Crime and Courts Act 2013. This would mean that if newspapers do not join a recognised press regulator in accordance with Sir Brian Leveson’s recommendations, they would be liable for the costs of claimants in data protection cases, win or lose. The timing is said to be coincidental.

The suggestion that this is a “compulsory arbitration scheme” appears to be misleading as Article 5.4 of IPSO’s Scheme Membership Agreement (SMA) with publishers explicitly promises: “No [member publisher] shall be obliged to participate in the Arbitration Service”, and it is not suggested that this rule will change. This means the system does not comply with Leveson’s requirement that all news publishers regulated by a recognised regulator must be members of the arbitration scheme.

It seems that some national newspapers have decided that they will agree to submit to new version of arbitration scheme where, unlike the earlier versions of the scheme when members of the scheme could pick and choose which cases to arbitrate, all eligible claims will have to be arbitrated.

In a press release IPSO said that the national newspapers published by News UK, Trinity Mirror, Associated Newspapers, Telegraph Media and the former Express Group have all agreed to take part in the compulsory arbitration scheme.

The press release is silent on the question of the online versions of these newspapers but IPSO’s Director of Operations told the Media Show this week that MailOnline will not be taking part. It is not clear whether newspapers like the Liverpool Echo who are members of the current scheme, when arbitration cases could be “cherry-picked” by the newspaper, will remain in that scheme when the new scheme starts.

It is, however, difficult to see how the fact that the scheme is compulsory will make any difference to claimants. Although the rules of the new scheme have not yet been published it seems likely that the fundamental defects of the current scheme will remain:

• The arbitrary damages cap – under the old scheme, £50,000; it is said that this will be raised to £60,000 under the new scheme (in contrast the maximum libel damages award by a the High Court is of the order of £300,000).
• The arbitrary costs cap – successful parties can only claim a maximum of £10,000 in costs (£20,000 if the parties agree). This leads to “equality of arms” issues: national newspapers can afford to devote large resources (including in house lawyers) to defending claims, whereas most claimants cannot be expected to spend more than the cost cap when they know they cannot recover the costs from an unsuccessful defendant.
• The scheme does not allow for appeals to the High Court on points of law – preventing judicial development of media law.
• The scheme only allows for hearings if the newspaper agrees and these will not take place in public (and it seems that it remains the position that they will take place at IPSO’s offices).

CLICK HERE for a full briefing on the top six reasons IPSO's arbitration scheme will continue never to be used by claimants. Evan Harris is executive director of Hacked Off, the campaign for a free and accountable press.