International Law Advisory - UK Parliament Passes Anti-Bribery Reform Law

On 8 April, the long-awaited UK bribery reform bill received Royal Assent in Parliament and became law. The bill has been codified as the Bribery Act 2010 (hereinafter, the "Act"). Most provisions in the Act do not come into force immediately, but will become effective following an order by the Secretary of State, which in turn will follow the publication of guidance by the Government concerning certain aspects of the Act.

Passage of the Act represents the culmination of over a decade of efforts to modernize the anti-bribery laws of the United Kingdom. The Act repeals the pre-existing criminal anti-bribery laws in the UK – including the common law bribery offence, the Public Bodies Corrupt Practices Act 1889, the 1906 and 1916 Prevention of Corruption Acts, and related measures – which were widely acknowledged as antiquated and lacking clarity and scope. The Act accomplishes three overarching objectives:

The Act creates a new bribery offence imposing liability on organisations whose employees or representatives engage in bribery in the UK or abroad. This represents an important new tool for regulators and prosecutors in the UK, whose earlier efforts at criminal enforcement of anti-bribery laws against companies were constrained by limitations in the general UK criminal laws in attributing criminal misconduct to organisations. The new corporate offence contains, however, an affirmative defence that will allow an organisation to avoid prosecution if it can demonstrate that it had implemented "adequate" anti-corruption compliance procedures. The Act comprehensively redefines the substantive criminal elements of bribery, including through a new general offence that covers domestic and foreign bribery, and a separate, stand-alone foreign bribery offence that introduces standards similar in scope to the OECD Anti-Bribery Convention and the U.S. Foreign Corrupt Practices Act ("FCPA"). The Act broadens the jurisdictional reach of the UK anti-bribery laws, to cover bribery worldwide by individuals who are UK nationals or are ordinarily resident in the UK, and organisations that conduct some portion of their business in the UK. The Act also achieves a number of institutional reforms, including eliminating the requirement that the UK Serious Fraud Office ("SFO") (the principal agency responsible for enforcing the Act) obtain permission from the Attorney General before instituting criminal proceedings for bribery offences.1

The Act comes at a time when anti-corruption enforcement in the UK is on the rise, and has galvanized significant public and administrative attention. As discussed in our prior alerts, the SFO has been very active over the last two years in bringing enforcement actions under the narrower, pre-existing UK anti-corruption laws. Companies with operations in the UK thus should take note of the Act, and consider whether their corporate compliance programs merit reconsideration in view of the new UK anti-bribery standards.

The principal features of the Act are discussed below.

General Offence

Section 1 of the Act includes a new general bribery offence, which defines bribery as the act of giving, offering, or promising "a financial or other advantage," directly or indirectly, with the intent to "induce" a person to perform any public- or business-related function "improperly."2 The offence applies equally to domestic bribery and overseas bribery, and to both commercial bribery and bribery of domestic and foreign public officials.

The Act dispenses with earlier standards under UK law that had focused on proving that the recipient of the bribe was an "agent" bribed in order to perform or omit to perform "any act in relation to his principal's affairs or business." The principal-agent standard was widely criticized as a vestige of Victorian and Edwardian era concerns over bribery (one of the primary factors motivating the introduction of that standard, in the 1906 legislation, was to criminalize bribes paid to household servants), and had proved difficult to apply in the context of modern business.

Expectation Test

Although the new general offence provides better clarity than earlier standards, it is not without ambiguity. For instance, the concept of "improper" in the new general offence is defined, in Section 4 of the Act, as conduct that is in breach of functions that the target of the bribe is "expected" to perform in "good faith" or "impartially," or where the target is held "in a position of trust". The Act provides, moreover, that this "expectation" of trust or impartiality is to be evaluated through an objective test of "what a reasonable person in the United Kingdom would expect", and that any "local custom or practice" in the bribery target's home jurisdiction is to be disregarded unless that practice is "permitted or required by the written law" in the country or territory concerned.

The "expectation" test introduces a unique bribery standard that is not reflected in the OECD Anti-Bribery Convention or the FCPA. The standard is somewhat cumbersome when viewed in the abstract, and any number of latent ambiguities may emerge as it is applied in individual cases. For example, would a "reasonable person in the United Kingdom" find it appropriate for a public contract tenderer to pay for a foreign government official to visit the...