The post provides a comprehensive summary and analysis of a recent French court decision that applies double jeopardy principles to U.S. deferred prosecution agreements.
Multi-national corporations – and the individuals who work for them – increasingly confront criminal investigations by authorities in two (or even more) countries at once for essentially the same acts. A very recent decision in France rules, for the first time, that companies that signed Deferred Prosecution Agreements (“DPAs”) in the United States cannot be further prosecuted in France.
The practical effect of the decision may for the moment be limited to multinational investigations involving France (and since it is subject to appeal, it may not definitively state the current status of the law even there). But the issue of “international jeopardy” is of increasing concern and importance, and this decision may well have an impact in the development of the law.
There are several scenarios that could lead to multiple (or parallel) prosecutions: often the acts constituting a criminal offense may have occurred in several different countries, thereby making each country potentially competent to investigate the entire crime of which the acts that took place on its territory were a part; most countries’ criminal laws provide that the government can prosecute its own nationals for criminal acts committed outside the national territory, which may overlap with “territorial” jurisdiction in other countries; and some countries – notably the United States – are expansive in determining their own power to prosecute, and may base a criminal investigation, for example, on the mere fact that a target used U.S. dollars to consummate an activity that otherwise took place entirely abroad. Generally speaking, a company or person in this situation faces a difficult (and often critical) strategic challenge of how to manage the various threats. One obvious risk is that if a target enters into any agreed-upon outcome – such as a guilty plea, a Deferred Prosecution Agreement or Non-Prosecution Agreement (“NPA”) – or even if he/she/it enters into discussions with authorities in one country in the hope of persuading them not to prosecute, the authorities in another country may learn of the underlying issues – either independently or because of publicity of the outcome of the first set of negotiations – and begin a new investigation seeking further penalties.
Most countries recognize that it is unfair to subject the same person or company to multiple prosecutions for the same acts. This principle is enshrined in the U.S. Constitution in the well-known Double Jeopardy Clause appearing in the Bill of Rights; in Europe and elsewhere the principle is generally known under the Latin phrase “ne bis in idem.” While such domestic constitutional provisions or laws are quite similar, there does not exist a universally accepted international norm, and the protection afforded by the laws in one country may offer no protection in another. As a result, targets of multiple investigations and their counsel generally rely more on their strategic negotiating skills than on a research of legal rights to avoid (or minimize) the risk of multiple prosecutions across borders. As multi-national investigations increase, however, the issue is receiving renewed attention in academia, in colloquia, and in “blog” discussions of the subject.Corporate counsel often inveigh against the threat of multiple prosecutions, and call for reform.
A very recent decision of the Criminal Court in Paris has taken a bold step in advancing this debate: In a decision announced on June 18, 2015, but explained in a written decision released only in September 2015, the Court acquitted four French corporations that were facing trial under French anti-corruption laws on the ground that they (or their corporate parents) had already signed DPAs with the United States Department of Justice (“DoJ”) and thus could not, consistently with French international obligations, be prosecuted a second time for what the Court found to be the same facts. The significance of this ruling remains to be seen: as a non-common law country, France does not consider such decisions to be “precedent,” and in any event the Public Prosecutor is appealing this acquittal (which French criminal procedures permit him to do) and the Paris Court of Appeals may reach a different conclusion when it rules on the matter, presumably in 2016. At a minimum, however, the decision provides an interesting and useful perspective on a matter of increasing importance.
The Basic Framework
Multiple prosecutions are not new, and can occur under a wide variety of criminal laws; the current prosecution and continuing investigation of senior officials of the international soccer organization FIFA for alleged fraud and corruption is perhaps the most noteworthy recent example. In terms of numbers, however, the surge of multiple prosecutions dates to international efforts to fight overseas corruption, and in particular to the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, adopted by the Organization for Economic
Co-Operation and Development (“OECD”) in 1997, which has been signed by all the major countries of Europe as well as many others, and which led to the transposition into domestic laws of signatory nations of criminal prohibitions generally similar to the U.S. Foreign Corrupt Practices Act (“FCPA”). A person or company engaging in overseas corruption anywhere in the world now faces the risk of prosecution in any signatory country where he/she/it may have sufficient contacts, either by citizenship or place of incorporation, or as a place where relevant acts took place.
The OECD Convention clearly contemplated the likelihood of multiple or parallel investigations. Article 4.1 of the Convention obligates each signatory country to “take such measures as may be necessary to establish its jurisdiction over the bribery of a foreign public official when the offense is committed in whole or in part in its territory” (emphasis added), and in Article 4.2 contemplates that each signatory country may have jurisdiction “to prosecute its nationals for offenses committed abroad . . . .”
Having recognized the conditions that create a risk of multiple investigations, the Convention then provided for no legally enforceable ban on multiple prosecutions, but rather stated (in Article 4.3) as follows:
When more than one Party [i.e., signatory country] has jurisdiction over an alleged offence described in this Convention, the Parties involved shall, at the request of one of them, consult with a view to determining the most appropriate jurisdiction for prosecution.
This provision clearly envisioned that each offender should ideally face no more than one prosecution, since it directs the multiple nations that may have had “jurisdiction over an alleged offense” to consult “with a view to determining the most appropriate jurisdiction for prosecution.” What the drafters apparently hoped was that, through such consultations, one, but only one, country would actually prosecute. While this provision has been cited for the proposition that a unitary prosecution should be a goal, arguments that it requires a single prosecution by prohibiting multiple ones have been routinely rejected, as illustrated by United States v. Jeong, 624 F.3d 706 (5th Cir. 2010), a case in which a businessman already convicted of corruption in Korea claimed that Article 4.3 of the OECD Convention preluded further prosecution in the United States for the same facts. The Court rejected this argument, noting:
[W]e conclude that the plain language of Article 4.3 does not prohibit two signatory countries from prosecuting the same offense. Rather, the provision merely establishes when two signatories must consult on jurisdiction.
As a result, multiple prosecutions for the same acts have in fact occurred with some regularity. One of the earliest under an OECD Convention-compliant national prosecution involved the Norwegian state oil giant, StatOil. As is well known, StatOil was prosecuted by Norwegian authorities and ultimately paid a significant penalty there. Apparently to its shock – and to the surprise of the Norwegian prosecutors – the United States Department of Justice thereupon commenced an independent investigation, which resulted in StatOil agreeing to additional fines for what apparently was the same set of facts that had been involved in the Norway case.
The Approach in the United States
The Double Jeopardy Clause found in the Fifth Amendment to the United States Constitution provides that no person shall be “subject for the same offense to be twice put in jeopardy of life or limb . . . .” This provision, however, has been subject to two interpretive limitations that restrict its scope.
First, it has always been the law in the United States that the Clause applies only to prosecutions by the “same sovereign” – that is, it prohibits the federal government, or any individual state, from twice prosecuting someone for the same facts, but does not prohibit the federal government from prosecuting a person convicted or acquitted by a state, or vice versa, or one state from prosecuting a person convicted or acquitted by another.
And, second, U.S. laws provide very few restrictions on the ability of the government to pursue simultaneous (and cumulative) criminal and administrative remedies for the same conduct, even if the latter results in painful financial penalties that are difficult to distinguish from criminal ones. In United States v. Hudson, 522 U.S. 93 (1997), the Supreme Court held that separate administrative sanctions can follow criminal conviction or acquittal, unless there is the “clearest proof ” that the legislature intended the administrative sanction to be penal in nature (which is virtually never the case) or if the sanctions are “so punitive” as to render them, in essence, criminal. As one commentator has written, after Hudson, “double jeopardy protection from civil sanctions will attach now only in the rarest of circumstances.” As a result, it is very common for a company to face simultaneous, or even successive, investigations by the DoJ and the SEC for the same conduct.
The absence of legally-enforceable protections noted here is tempered to some degree by self-imposed – but not legally binding – “guidelines” or “principles” announced by the Department of Justice. The most important of these is the socalled “Petite Policy,” known more formally as the “Dual and Successive Prosecution Policy,” which provides that a prosecution in a state will generally bar a federal prosecution, absent some unusual circumstances such as indications that the state result was affected by incompetence or fraud, or in cases where there is an important federal interest. These principles are real in the sense that the federal government rarely engages in double prosecution domestically, but they nonetheless do not state rights that can be enforced in court.
Internationally, the DoJ admits of no legal requirement that it give any legal standing or significance to a prosecution elsewhere in the world. With respect to corporations, the announced general policy of the Department of Justice – when faced with a situation that has already resulted in a criminal prosecution elsewhere – is that the Department of Justice, in those situations where it considers that it has jurisdiction to do so and sees any U.S. interest, will determine whether the foreign outcome was “adequate”; further, as a matter of both announced principle and observed practice, the Department of Justice gives credit for fines actually paid outside the United States by deducting them from its calculation of a fine or other payment that would be due under U.S. laws. As a result, counsel advising parties involved in potentially multiple investigations can prepare for negotiations with the U.S. Department of Justice and argue that a non-U.S. outcome should bar any U.S. proceedings at all, or, at a minimum, should limit a U.S. prosecution to those areas not already addressed elsewhere. Recently, the former argument – that the U.S. government should do nothing at all – appears to have been successful in the case of SBM Offshore, where the Department of Justice announced that it would drop its two-year investigation after the target, a Dutch oil services company, announced an agreed-upon outcome in the Netherlands, where it paid a significant fine. Many other cases result in joint or coordinated negotiations where the prosecuting authorities have agreed on the charges to be admitted, and the respective payments made, by the investigated corporation; a “credit” is then given for payments made in each country. But these negotiations are based entirely on the discretion of the American prosecutor; in the absence of judicially enforceable rules, and heeding the adage that “adequacy” may well be “in the eye of the beholder,” it is often problematic to start a defense or negotiations in another country if there is a likelihood that the U.S. government may consider itself jurisdictionally competent to proceed and will later get involved.
The Developing Law in Europe and France
The legislatures and courts in Europe have, over time, engaged in a number of efforts to provide some semblance of coherence with respect to prosecutions in that continent. Traditionally, European countries have recognized some form of the “dual sovereignty” principle which, as in the United States, permits multiple prosecutions. In France, via legislation going back to the 19th century, this approach has been amended to distinguish between cases in which prosecutions in France are based on a “territorial” application of its criminal laws to acts committed in France, on the one hand, and, on the other, “extra-territorial” applications of them – such as occurs if conduct taking place abroad is committed by a French person or corporation, or where a French person or corporation is a victim. In the latter case, Article 692 of the French Code of Criminal Procedure provides that “no prosecution can take place with respect to a person who has been definitively convicted in another country for the same facts, and, in case of conviction, where the penalty has been performed or suspended.” However, for all “territorial” prosecutions, domestic French law does not provide any ne bis in idem protection for prosecutions overseas.
A number of European treaties have contributed to the debate regarding this issue. Protocol Number 7 of the Convention for the Protection of Human Rights and Fundamental Freedoms, adopted in 1984 by the Council of Europe and signed by most but not all of its members, provides in its Article 4 that “no-one shall be liable to be tried or punished again in criminal proceedings under the jurisdiction of the same State for an offense for which he has already been finally acquitted or convicted in accordance with the law and penal procedure of that State.” While by its terms – and specifically the mention of “the same State” – this provision did not purport to “internationalize” the principle of ne bis in idem, its appearance in this Convention may have contributed to a heightened perception of the importance of the rule. The Council of Europe also took a step towards recognizing – and in fact internationalizing – the principle of ne bis in idem when in 1975 it modified its procedures for trans-European arrest warrants set forth in the European Convention on Extradition of 1957 by providing, in the First Additional Protocol, that a requested country need not extradite a person to a requesting country if that person had already been convicted or acquitted in a third country. This principle was also recognized in Article 4(5) of the Council Framework Decision of 13 June 2002 on the European Arrest Warrant,15 which was transposed into French law in Article 695-22(2) of the French Code of Criminal Procedure. Separately, in 1996, France’s highest administrative court, the Council of State, reviewed, at the request of the Prime Minister, the then-working version of what became Article 20 of the Treaty of Rome (which provides that the International Criminal Court cannot prosecute individuals convicted or acquitted in national courts – nor vice versa – absent a showing that the prior judgment was not conducted “independently and impartially.”) Noting that the issue was of an important and constitutional dimension, the Council expressed the view that “international law” recognized as an exception to the principle of ne bis in idem only circumstances involving a situation in which a prior judgment was based on fraud.
As of 2009, when the Charter of Fundamental Rights of the European Union entered into full legal effect, citizens in the European Union are now protected, under Article 50 of the Charter, by the provision that states:
No one shall be liable to be tried or punished again in criminal proceedings for an offence for which he or she has already been finally acquitted or convicted within the Union in accordance with the law.
In 1966, the United States, France and a number of other countries signed the International Covenant on Civil and Political Rights (“ICCPR”); the ICCPR, which was central to the recent French decision, will be explored in greater detail in the next section.
Thus, the situation in France and in Europe generally has been that the principle of ne bis in idem has achieved increasingly important status and widespread acceptance. This evolution in approach has accompanied changes in European laws with respect to the vulnerability of companies to be pursued for both criminal and administrative sanctions, the issue that was largely resolved in the United States in favor of permitting multiple actions by the Hudson decision mentioned above. In 2014, the European Court for Human Rights ruled in the Grande Stevens decision that administrative penalties obtained by the Italian Companies and Stock Exchange Commission precluded a criminal prosecution for the same acts by the same company, a decision echoed in 2015 in France by a decision of the Constitutional Court, which barred an imminent criminal trial of a number of individuals and companies accused of insider trading of shares in EADS on the ground that the same defendants had already been absolved of responsibility after an administrative investigation by the French Autorité des Marchés Financiers, the rough equivalent of the SEC.
The Recent French Decision
In 2007, French authorities commenced an investigation into approximately 20 French companies suspected of having violated the terms and conditions of the so-called “Oil for Food” program administered by the United Nations that provided for strictly limited and supervised humanitarian transactions with the Iraq regime headed by Saddam Hussein. Four of those companies had – either directly or through agreements negotiated by their corporate parents – already entered into Deferred Prosecution Agreements with the Department of Justice and, in some instances, into similar agreements with the Securities and Exchange Commission, whereby they had paid significant fines. Under the terms of the various DPAs, the period during which the Department of Justice could reopen the investigations had expired, and thus through the DPAs the respective companies benefitted from the commitment that they would not be prosecuted for the matters set forth therein. During the course of the investigation in France, these four companies all asked that the investigation be dismissed as to them on the basis of ne bis in idem, which was denied, and as a result the four of them, together with the others, all proceeded to be tried on the merits. In a decision publically announced on June 18, 2015, but not fully explained until the written judgment was released some months later, the Court acquitted all of the defendants. With respect to the four that had signed DPAs, the Court concluded that the principle of ne bis in idem precluded prosecution in France; the other corporations were acquitted on the basis of the factual insufficiency of the proof against them.
On the issue of protection against multiple prosecutions, the Court first rejected the argument that it was bound by Article 692 of the Code of Criminal Procedure, cited above, which applies to French prosecutions based upon its extraterritorial principles, noting that some of the acts alleged to have been committed took place on French territory, and thus this was a “territorial” prosecution and did not benefit, under French domestic law, from the principle of ne bis in idem because judgments of foreign criminal tribunals have no res judicata effect when they concern facts committed on French territory. The Court was, however, convinced that it was bound by Article 14(7) of the ICCPR which provides as follows:
No one shall be liable to be tried or punished again for an offence for which he has already been finally convicted or acquitted in accordance with the law and penal procedure of each country.
The Court concluded that this text is not limited to guard against multiple prosecutions by the same state, but rather by its open-ended terms appeared to protect against multiple prosecutions wherever the events had taken place. And noting that France had not only signed but implemented the ICCPR, the Court felt constrained to apply it in the case before it.
In order to apply this reasoning to the specific facts, the Court then took two steps. First, with respect to each defendant, it compared the facts recited in its respective DPA and concluded that they appeared to be the same general facts as those appearing in the accusations in France. And second, the Court concluded that the DPAs had the essential qualities of a “judgment,” thereby qualifying the companies for ne bis in idem protection. The Court’s reasoning on this second issue is a bit unclear. It notably does not refer to any specific act by a U.S. court as having been the basis for the prior act, but rather referred to the DPA as “a decision from the Department of Justice [in French: Ministère Public].” In so concluding, the Court noted that it was relying on an expert opinion submitted by a well-known international criminal legal specialist and professor of law in Paris, Didier Rebut. Its apparent reasoning is that the combination of a significant payment together with a protection against further prosecution had all the hallmarks of a prior “judgment.”
This decision is noteworthy in at least two respects: First, it may be the first time that a European court has turned to the ICCPR and relied on it to reject an otherwise procedurally appropriate prosecution on the basis of a prior prosecution in the United States. And second, the Court took a large step forward in interpreting an executed (and completed) DPA as a “judgment” worthy of ne bis in idem / double jeopardy application. Particularly since neither French criminal procedure nor its traditions and culture recognize DPAs as a means of addressing criminal investigations, and given the “asymmetry” noted below (because the United States will not recognize a French criminal judgment as preclusive under the ICCPR), this leg of the Court’s reasoning may be subject to scrutiny on appeal.
The Implications of the Decision
The Oil-for-Food decision is likely to have short-term and longer-term impacts.
In the short term, the Public Prosecutor has appealed the decision. In France, an appeal is in essence a new trial, and the Prosecutor can appeal an acquittal, even if based on insufficiency of evidence; thus, it is possible that both the acquittal of four companies on the basis of ne bis in idem but also of the other companies may be reviewed. Further review of the ne bis in idem decision may well occur in France’s Supreme Court (Cour de Cassation), which reviews only questions of law.
The decision will certainly affect defensive strategies for companies involved in multi-national investigations that involve or may involve France. With respect to any actual or threatened prosecutions in France in which companies have already signed a DPA (or equivalent agreement) in the United States and any other country, or will do so in the future, counsel will certainly urge acceptance of the Court’s reasoning.
The more intriguing implications, however, are longer term.
First, the decision may inadvertently increase the predominance of U.S. investigations relative to the efforts in other countries: if it is established that U.S. negotiated outcomes preclude prosecutions elsewhere, it would become especially useful to reach such an agreement. This is particularly true because the French Court’s decision will not be “symmetrical” in the sense of contemplating that U.S. courts would give similar recognition to French judgments of any sort (let alone negotiated outcomes): the United States signed the ICCPR (the cornerstone of the French decision) but expressly stated upon signature that it did not create any enforceable rights in the United States, and the legislature did not implement it by adopting conforming legislation. As a result, all efforts in the United States to rely on it in the courts have routinely failed on the ground that the treaty is not “self-executing,” and as such may have “moral authority” but does not provide a right or defense in U. S. courts. Thus, the decision may in fact encourage a “race to the courthouse” in countries that offer attractive outcomes, of the very sort that some commentators have predicted as an unwelcome side-effect of any effort to adopt an “international double jeopardy” regime.
Second, the decision reflects a situation that cries out for international collaboration. Ideally, the signatories to the OECD Convention might contemplate a more procedurally comprehensive, and binding, version of Article 4.3 that would allocate responsibilities for pursuits of corruption that spread across borders. More practically, the principal countries involved should, and undoubtedly will, engage in more effective and transparent cooperation. Officials in the United States, as by far the most active, aggressive and effective enforcers, should in particular be more clear in articulating the standards for the “adequacy” of non-U.S. prosecutions that they would find sufficient, which would have the salutary effect of encouraging non-U.S. outcomes like that in the SBM Offshore case.