In a letter to Mr O’Callaghan, Neil McDonnell, chief executive of the Irish Small and Medium Enterprises Association (Isme), said: “The civil law system is actively conspiring to extort money from them in vexatious, unmeritorious litigation.”

The letter, released under freedom of information legislation, followed a recent meeting between Mr McDonnell and the minister in which they discussed ongoing efforts to reform defamation laws, The Irish Times reports.

Particular concern has been raised about false allegations levelled at retail staff, including claims relating to shoplifting incidents. According to Isme, such claims are increasingly being weaponised in litigation that mirrors fraudulent personal injury cases.

Based on data from a single security provider, Isme estimates that defamation claims cost small businesses between €30 million and €50 million per year — a figure that does not include what it believes to be widespread undocumented settlements.

Isme and other interest groups, including media organisations, are hoping to influence the shape of the Defamation Bill. The government has previously committed to making the legislation a priority.

Among the changes sought by Isme is the introduction of a “harm test” and additional filtering mechanisms that would limit the volume of defamation actions allowed to proceed. The association pointed to official statistics showing that Ireland sees more defamation cases than the UK, despite the similarity between their legal systems.

“When Ireland has the same number of defamation cases as a jurisdiction with a population 12 times greater, there is an undeniable systemic problem,” the letter stated.