A parliamentary committee has proposed wide-ranging changes to the libel laws but rejected the introduction of legislation on privacy.

The Commons Culture, Media and Sports Committee recommended that the Press Complaints Commission amended its code to include a new requirement that journalists notify the subject of an article before it is published.

It said: ‘Giving the subjects of articles the opportunity to comment is often crucial to fair and balanced reporting, and there needs to be explicit provision in the PCC code itself.’

Failure to notify should be treated as an aggravating factor when assessing any damages in privacy cases, it said.

But the MPs stopped short of calling for a new privacy law, saying: ‘Privacy should continue to be determined according to common law, and the flexibility that permits, rather than set down in statute’.

It suggested the government consult on whether the Reynolds defence of responsible journalism should be put on a statutory footing to better protect ‘serious, investigative journalism and the important work undertaken by NGOs’, by amending the Defamation Act 1996.

But it warned that doing so could risk ‘unforeseen consequences’. It noted: ‘It could be maintained that Reynolds/Jameel applied more flexibly is sufficient and we are concerned that codifying the defence and the "public interest" in law may in itself introduce rigidities or make for less accurate reporting.’

The committee recommended the introduction of a new tort of ‘corporate defamation’ that would require companies to prove ‘actual damage’ to their business before they are able to sue.

To curb the growth of ‘libel tourism’, where litigants from abroad sue in the UK courts to take advantage of laws that are seen as favouring claimants, the report said the Civil Procedure Rules should be amended to introduce ‘additional hurdles’ for claimants in cases where neither party lives or works here.

It said: ‘On balance, we believe there is sufficient evidence to show that the reputation of the UK is being damaged by our overly flexible jurisdictional rules and their application by individual High Court judges.’

On internet publication, the committee recommended the government introduce a one-year limitation period on actions brought in respect of articles downloaded from websites. Under current laws, each time an article is downloaded it counts as a fresh publication.

‘It is clear that a balance has to be struck between allowing individuals to protect their reputation and ensuring that newspapers and other organisations are not forced to remove from the internet legitimate articles merely because the passage of time means that it would be costly to defend them,’ observed the committee.

On the issue of the high cost for publications of defending libel actions brought by claimants under conditional fee arrangements, the committee said it did not agree with the Ministry of Justice’s proposal to cap the level of success fees at 10%, nor that success fees should become wholly irrecoverable from the losing party.

But it supported the recoverability of such fees from the losing party being limited to 10% of costs, leaving the balance to be agreed between solicitor and client.

Considering the changes required, it said: ‘Lawyers must also play their part. Just as the press must be accountable for what it writes, lawyers must be accountable for the way in which cases are run, and that includes costs.’

‘The current costs system, especially the operation of CFAs, offers little incentive for either lawyers or their clients to control costs, rather the contrary. It also leads to claims being settled where they lack merit.’

The committee’s 162-page report on libel, privacy and press standards was the culmination of an 18-month investigation during which it heard evidence from witnesses including justice secretary Jack Straw, newspaper editors, and Formula One boss Max Mosely.

In conclusion it said it hoped its recommendations would ‘ help to restore the delicate balances associated with the freedom of the press’.

Individual proposals would have their critics, it said, ‘but we are convinced that, taken together, our recommendations represent a constructive way forward for a free and healthy UK press in years to come’.