Corporate Criminal Liability: The Why And The How

• Published date: 27 July 2021
• Subject Matter: Corporate/Commercial Law, Criminal Law, Corporate and Company Law, White Collar Crime, Anti-Corruption & Fraud, Corporate Crime
• Law Firm: BCL Solicitors LLP
• Author: Mr John Binns

Government plans to convict more companies are progressing - but does the Law Commission's new discussion paper fairly reflect the issues?

Two things, at least, are clear from the Law Commission's latest discussion paper on corporate criminal liability. The first is that there is a high degree of consensus (from those whose opinions seem to matter, namely investigators, prosecutors, pressure groups, and the Commission itself) that there is something wrong with the current law. The second is that there is no consensus at all on precisely what is wrong, and what to do about it.

Nearly 50 years on from the case still referred to for the general principle of corporate liability, Tesco Supermarkets Ltd v Nattrass [1971] UKHL 1, its facts still provide a neat illustration of the issue: when a poorly supervised shop assistant switched the prices on a discounted washing powder, and the manager left the discount sign up, the court held that Tesco itself was not criminally liable, because neither assistant nor manager was a "directing mind and will" of the company.

Exceptions to that general principle have been growing since then. A New Zealand case, Meridian Global Funds Management Asia Ltd v Securities Commission [1995] UKPC 5, has often been cited as the basis for interpreting various statutes so that companies can be guilty of breaching them if the alternative would defeat their purpose. Various offences of strict liability, for instance in health and safety, have been used to convict companies and to impose large fines on them.

"FAILURE TO PREVENT" AND DPA

A handful of statutes have made more sophisticated inroads into the principle. Most famously, companies can now be liable under the Corporate Manslaughter and Corporate Homicide Act 2007, where the way in which their activities are organised causes a death and amounts to a gross breach of their duty of care. Secondly, the Bribery Act 2010, where an associated person pays a bribe and they cannot prove that they had adequate procedures to prevent it.

The last few years have seen an evident appetite from the government to extend both the liability of companies and the means of bringing them to justice, though not without controversy. In 2010, the Law Commission recommended that future statutes should be clearer about how companies should be liable and encouraged courts to use Meridian meanwhile to interpret laws more strictly against companies. Under the Crime and Courts Act 2013, Deferred Prosecution...