In-house counsel advising businesses that operate in France (or working in French businesses that operate in other countries) should be aware of the French mechanisms for deferred prosecution agreements and plea bargaining. This article gives an overview of what in-house corporate counsel should consider in this respect when their company faces criminal proceedings in France.
In 2016 pursuant to the Sapin II Law, France implemented a new form of negotiated deferred prosecution agreement (“DPA”), namely the Judicial Public Interest Agreement (“Convention Judiciaire d’Intérêt Public”, or “CJIP”), for companies in cases of, inter alia, corruption and influence peddling. This framework allows legal entities to enter into a settlement for a limited list of offenses and involves three kinds of obligations: (1) the payment of a fine; (2) the implementation of a compliance program; and (3) the obligation to compensate the victims.
French criminal law does not however have a very long-standing tradition of negotiated justice. This procedure of deferred prosecution agreement along with the French plea-bargaining, provides the legal framework for negotiated justice, an alternative to lengthy trials involving corporate entities.
The plea bargaining procedure (“Comparution sur Reconnaissance Préalable de Culpabilité” or “CRPC”), which involves pre-trial guilty plea of the offender, was first introduced in France in 2004 in cases of minor offenses. The procedure was later significantly broadened by a 2011 new law introducing new possibilities to judicially process white-collar crimes.
These procedures, i.e., the CJIP and the CRPC, have created a new incentive for corporations to cooperate with French authorities, rather than adopting a more traditional criminal defense, thereby allowing them to mitigate their liability and be more active in criminal proceedings.
2. The CJIP, a French DPA for legal entities
A. An agreement to end prosecution proceedings without an admission of guilt
The public prosecutor is entitled to propose a CJIP to legal entities for a limited list of white-collar crime offences such as corruption, influence peddling, tax fraud and money laundering (article 41-1-2 of the Criminal Procedure Code).
In exchange for the end of prosecution proceedings against the legal person, the latter agrees to fulfil a number of obligations, which may include the payment of a fine not exceeding 30% of the average annual turnover, the implementation of a compliance program under the supervision of the French Anti-Corruption Agency, and compensation of the victims. The agreement must be approved by the Court during a public hearing and is published on the French Anti-Corruption Agency’s website.
A CJIP may be applied even if offenses are committed abroad by a person of French nationality or by a person who habitually resides or carries out all or part of his/her economic activity on the French territory (Articles 435-6-2 and 435-11-2 of the Criminal Code).
B. Obtaining a CJIP and conducting negotiations with the authorities
The French Anti-Corruption Agency and the National Financial Prosecutor's Office (“PNF”) released guidelines on the implementation of the CJIP. The prosecutor has the initiative of the CJIP (which cannot be imposed by the company).
In deciding whether to offer the CJIP, the prosecutor assesses 3 main criteria (per a circular dated 31 January 2018 from the French Ministry of Justice):
- The background of the legal entity, its criminal record, and whether the legal person has already benefited from a CJIP in the past,
- The voluntary nature of the disclosure of facts. Although, this is not a prerequisite for having a CJIP, it remains a determining criterion.
- The quality of the cooperation. In this respect, initiating an internal investigation would be viewed positively by the prosecutor’s office.
If a CJIP is a proposed option, the prosecutor will submit terms for the CJIP, including the amount of the fine. The latter is proportionate to the advantages drawn from the corruption allegations, within the limit of 30% of the company’s average annual turnover calculated on the last three annual turnovers.
The following criteria will be factored into the amount of the fine:
- whether the facts are serious or long-lasting,
- the company’s criminal record,
- whether the legal person has revealed the facts voluntarily and quickly; and
- whether an internal investigation was conducted.
Any documents or information given to the prosecutor as part of the CJIP negotiation remain confidential. However, until a formal CJIP proposal is submitted by the prosecutor, negotiations should be led with increased caution as information communicated will not be considered confidential.
Although the CJIP can bring an end to legal proceedings initiated against legal persons for probity offences, private individuals (such as current or former executives or employees involved in the allegations) could still find themselves criminally liable before French Courts for the same offenses. The conclusion of a CJIP by the legal entity may thus infer heavily on the criminal proceedings against managers prosecuted after or during the CJIP. Plea bargaining may however appear as a form of equivalent to the CJIP for private individuals, although it implies an admission of guilt and the registration in the criminal record, as explained in the next section.
3. Plea bargaining in France, appearance upon prior admission of guilt
A. A French guilty plea procedure available to both legal entity and individuals
French law provides for another alternative to a traditional court hearing. The French plea bargaining (“CRPC”), which is a form of guilty plea, shares similarities with the CJIP.
Plea bargaining allows the prosecutor to offer a reduced sentence to any person, whether private individual or legal person, who admits to having committed a crime. The defendant can also request such a procedure to be implemented if the prosecutor agrees to it (Article 495-7 of the Criminal Procedure Code).
Unlike the CJIP, this procedure implies a prior admission of guilt by the defendant. Thus, the settlement which will ultimately be approved before a Court, will be considered as an effective criminal conviction, and will be mentioned in the defendant’s criminal record. This will exclude companies from French public procurement contracts.
The sentence offered under a plea bargain cannot exceed half of the prison sentence incurred, nor can it be more than 3 years. Once the prosecutor has proposed a sentence, the defendant may accept or refuse his proposal:
- If the defendant refuses the sentencing offered by the prosecutor, the case is sent to trial.
- If the defendant accepts the sentence, then the plea bargaining, like the CJIP, must be approved by the Court. The Court assesses the adequacy of the sentence, taking into account the circumstances of the offence and the personality of the defendant. At this hearing, victims may bring claims for reparation of their losses.
Unlike the CJIP, plea bargaining does not open a window to negotiations with the prosecutor but simple exchanges as far as sentencing is concerned. Communications during the plea-bargaining procedure are also deemed confidential and cannot be used as further evidence should the negotiations fail, and the case go to trial. Although the guidelines for setting a sentence for plea bargaining are not as well defined as for the CJIP, similar criteria (both financial and conduct elements) will be factored into the decision.
Plea bargaining covers a wider scope of offences than the CJIP. It can be used for all offences punishable by a prison sentence of up to ten years (offences called “délits” in French) except for:
- offences committed by minors,
- press-related offences,
- involuntary manslaughter,
- political offences (for example electoral fraud),
- voluntary or involuntary harm to the integrity of persons and sexual assaults when they are punishable by a prison sentence of more than five years.
B. Corporate defense: the combination of a CJIP for the legal entity and a plea-bargain for individuals
Since the CJIP contains a complete set of factual information, the admission of facts as well as criminal qualification, it will necessarily influence the defense of private individuals who were involved in the disputed facts and may be named in the CJIP.
In that respect, the first CJIP signed in France on 30 October 2017 by HSBC Private Bank was followed by a plea bargaining by the former CEO of the Swiss subsidiary. While the CEO was facing 10 years imprisonment and a fine of 750,000 Euro for the offence of aggravated money laundering, he was sentenced to 12 months of suspended imprisonment, a fine of 500,000 Euros, and an exemption from registration in the Bulletin n°2 of his criminal record.
The two disadvantages of this procedure are the requirement of an admission of guilt, and the fact that while the sentence was not entered in Bulletin n°2 of the person’s criminal record (which can be requested by some type of employers), it still appears in Bulletin n°1 (which is accessible to courts).
However, such procedure allows for a rapid settlement of the case through a negotiated sanction, and avoids the risk of a long, costly, risky trial and the associated media exposure.
When companies face allegations of white-collar crimes, French Law provides the possibility to conclude a CJIP or a CRPC. These procedures provide significant advantages for companies, notably when compared to a lawsuit. The role of in-house counsel is therefore essential, especially as they are required to:
- Act promptly to determine whether French law applies and to assess whether the conditions required to obtain a CJIP are met;
- Bear in mind that the enhancement of a compliance program or the conduct of an internal investigation could usefully be initiated, notably in view of the negotiation of a potential CJIP;
- Retain an independent attorney when the assessment of the situation and the legal options available requires an in-depth understanding of French Criminal Law in order to build an adequate and satisfactory strategy for the company;
- Work jointly with the company’s attorneys in conducting the internal investigation, improving compliance programs, negotiating with authorities and providing them with information.