2023年4月3日
On 10 June 2022, the Law Commission published its Corporate Criminal Liability 'options paper' for the Government. This paper aims to outline possible ways to strengthen corporate liability, both from a criminal and civil perspective.
The general rule in England and Wales to establish criminal liability in the corporate environment is the 'identification principle'. This is the requirement that prosecutors need to prove that the "controlling mind and will" of directors or other members of senior management was culpable.
However, successive cases have tended to narrow the operation of this principle, culminating in the Barclays decision in 2018 which held that a Chief Executive and Chief Finance officer were not, on the facts of that case, directing minds or wills of Barclays because in relation to the conduct in question they did not have full autonomy in relation to that conduct. One of the effects of such a narrowing is to unfairly penalise small companies, where senior officers are more likely to have such autonomy and authority, compared to large corporations where such authority is often much more diffuse.
In November 2020 the UK Government tasked the Law Commission to review the law. The Options Paper followed a period of consultation and outlined several options to strengthen corporate liability.
These are as follows:
In amongst the headline offences there is a wealth of detail which points to a direction of travel for corporate criminal law, should the government (and the courts) want to take it up: For example, there are principles for future 'failure to prevent' offences in relation to benefit, extraterritoriality and conspiracies, attempts, aiding and abetting etc. There was also a thorough review of the 'consent and connivance' provisions which appear in over a thousand legislative instruments, creating liability for directors and senior managers for corporate offences, effectively on the basis of negligence. This creates a potential for grave unfairness where a director could be convicted on the basis of mere negligence, even though the corporate offence requires some higher, more direct form of mens rea. Its conclusion is that where director liability is extended to offences requiring proof of intent recklessness or dishonesty, the individual's liability should be limited to connivance or consent (ie not mere neglect). Such is the potential unfairness they highlight, and so large is the task of amending legislation, that they suggest either a general provision or CPS guidance to the effect that it will rarely be in the public interest to prosecute a director for an offence requiring proof of fault unless there is evidence that the director consented to or connived in the commission of the offence.
The options raised by the Law Commission appear to be an attempt to strike a balance between corporate and individual culpability and accountability and suggest a move towards limiting over burdensome and costly self-regulation. Hopefully the government will act swiftly on the suggested reforms.
To discuss the issues raised in this article in more detail, please reach out to a member of our Disputes & Investigations team.