How to integrate legal and PR strategy to optimise litigation results

Litigation | 30 May 2019

Gone are the days when clients and PRs were not trusted with draft judgments. Nowadays Litigation Support communications professionals are an integral part of the core legal team. Seeing draft judgments in absolute confidence ahead of their finalisation and hand-down allows PRs to spot words which might be immaterial to the overall judgment, but which could be used by the media and the other side to punish the client or law firm involved; often judges will be willing to amend these points, if the argument is genuine and put very clearly and without fuss by the legal team.

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An overview of the Anti-Bribery Law in India: Key takeaways for Commercial Organizations

Dispute Resolution | 30 May 2019

Introduction

The Prevention of Corruption Act, 1988 (“PC Act”) is the principal anti-bribery legislation in India. The PC Act criminalizes the following acts:

  • Accepting or obtaining or attempting to accept or obtain an undue advantage by a public servant with the intention to perform or cause performance of public duty improperly or dishonestly or to forbear or cause forbearance to perform such duty either by himself or by another public servant;
  • Accepting or obtaining or attempting to accept or obtain an undue advantage by a person from another person as a motive or reward to induce a public servant, by corrupt or illegal means or by exercise of his personal influence to perform or to cause performance of a public duty improperly or dishonestly;
  • Giving or promising to give an undue advantage by one person to another person with an intention (a) to induce a public servant to perform improperly a public duty or (b) to reward such public servant for the improper performance of a public duty;
  • Giving or promising to give an undue advantage by a person associated with a commercial organisation to a public servant with an intention to obtain or retain business for such commercial organisation or any advantage in the conduct of the business for such organization.

The ‘bribing of a public servant’ was introduced as a direct offence by way of the amendment to the PC Act with effect from July 2018. Specific to, commercial organizations, a

new offence of ‘bribing of a public servant by a commercial organisation’ was recently introduced (Section 9, PC Act). These are discussed in detail in this note.

Key takeaways for commercial organizations under the PC Act

Firstly, a ‘commercial organization’ is defined to mean:

  • A body incorporated in India and which carries on business in India or outside India;
  • Any body incorporated outside India but which carries on a business or a part of the business in any part of India;
  • A partnership or association of persons formed in India or such partnerships or association formed outside India but which carries on a business or a part of a business in any part of India.

As indicated above, bribing a public servant by a commercial organization is now a direct offence. Equally, if any person ‘associated with a commercial organization’ also gives or promises to give any undue advantage to a public servant intending to (a) obtain or retain business for such organization or (b) to obtain or retain an advantage in the conduct of business of such organization, then such commercial organization shall be punishable with fine. A person ‘associated with a commercial organization’ has been defined to mean any person performing services for or on behalf of such organization including an employee, agent or subsidiary. Thus, there is now a wide net cast on commercial organizations in terms of potential liability that can be attracted should it directly or through persons associated engage in conduct criminalized by the anti-bribery legislation.

Attribution of liability to a commercial organization or its officers/ directors

Under general principles of Indian law, the general principles of criminal liability in relation to a company can broadly be understood in the following manner: • the liability of a company for the acts of its officers / employees (i.e. by application of the doctrine of attribution) and

  • the liability of the directors for the acts of the company (i.e. by application of the principle of vicarious liability of the directors).

In terms of the accepted principles of attribution, the company can be made liable for the acts of its officers/ employees who are the ‘alter ego’ / directing mind and will of the company. Companies can be made liable for statutory or common law offences involving ‘mens rea’ and a corporation cannot escape criminal liability merely because the punishment prescribed for such specific offence envisages imprisonment.

Separately, insofar as the criminal liability of the officers/ directors for the acts of the company are concerned, under general principles of Indian law, there is no automatic vicarious liability of the directors or the officers of the company for the acts or omissions of the company. So as to make a director or an officer of the company vicariously liable for the acts of the company, the statute must explicitly provide for such vicarious liability of the directors or persons responsible for the management of the company, should the company be held guilty of an offence under such statute. No person, by merely holding the office of a director or officer of a company, can be made criminally liable for the offences committed by such company. However, in circumstances where it can be established that such director or officer of the company was complicit and/or abetted the commission of such offence by the company, he may be proceeded against for the abetment and/or the commission of such an offence.

Some of these general principles now stand altered basis recent amendments made to the PC Act.

The PC Act now recognizes a form of vicarious liability, in as much as, a person in charge of a commercial organization is made liable for the acts of such commercial organization upon proof that such an act was committed with the consent or connivance of such person in charge.

Need for bribery prevention procedures

Given the wide net cast on commercial organizations that can accrue basis acts of persons associated with such organization, the PC Act now enables a commercial organization to raise a defence and prove that it had adequate procedures in place to prevent persons associated with it from undertaking such conduct and accordingly, it can avoid any liability in terms of the PC Act.

In the absence of adequate bribery prevention procedures, the commercial organisation may be exposed to liability for all such acts of such associated persons. Post these recent amendments, the Indian law now is substantially similar to the United Kingdom Bribery Act 2010 (“UKBA”) on this aspect.

While as of now there are no prescriptive guidelines in respect of the anti-bribery procedures to be adopted by commercial organisations that would pass the muster of Indian law, commercial organisations exposed to operations in should relook at their existing policies or in the absence of policies adopt such polices or standards as may be proportionate to the nature or scope of their business, so as to avail the benefit of the defence should there arise a situation to do so.

Penalties for violation of PC Act

Commercial organizations facing a prosecution / conviction under the anti-bribery law in India would face the likelihood of imposition of fines should they be convicted of an offence of paying a bribe. It is pertinent to note that there are no sentencing guidelines pertaining to imposition of fines in India. The courts typically arrive at the fines by considering factors such as the gravity of the offence and the amount of money or the value of the property involved in the commission of the offence. In sentencing fines, the courts typically target the deterrence of the commission of such offence and endeavour to ensure that no person benefits from his/her wrongdoing.

As per the PC Act, the quantum of fine is to be ascertained basis the amount or property the accused had obtained or the property the accused person is unable to satisfactorily account for.

Further, where it is proved that the offence had been committed with the consent or connivance of any director, manager, secretary or other officer of a commercial organization, such person shall be guilty of the offence and shall be liable for punishment for 3-7 years and shall also be liable to fine.

The following table briefly captures the changes effected to the PC Act in so far as the liability of the commercial organisations and/or its officers is concerned:

  Pre Amendment Act

(Prior to July, 2018)

Post Amendment Act

(Post July, 2018)

Offence of giving or promising to give bribe No direct liability Direct liability
Liability of a commercial organisation Abetment of the commission of the offence and offence by a public official under the PC Act or conspiring with the public official for the commission of an offence under the PC Act Direct liability for giving or promising to give bribe or liability under for the acts by persons associated with the commercial organization
Liability could be attributed to the commercial organization if the offence was committed only by directing mind such organization Liability is incurred for all the acts of any person associated with such organization, including its employees, agents, contractors, subsidiaries etc.
Vicarious liability of the officers of the commercial organisation  No automatic vicarious liability Officials      of      the      commercial

organization are vicariously liable

Ashfords’ retail roundup

Retail | 03 May 2019

 

Brand management

Brands are one of the most valuable assets of any business. They act as ‘badges of origin’, distinguishing products and services of one business from those of competing businesses. They also impart a message to customers, acting as a guarantee of quality and authenticity. In this article, we consider five important aspects of effective brand management that should always be considered (but that are often overlooked).

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State your intentions – first impressions on the revised Takeover Code

Mergers and Acquisitions | 03 May 2019

It has been a year since the Takeover Panel updated its rules regarding statements by an offeror company of its intentions for a target’s business. The first formal reports by offeror companies on whether they have complied with the new regime are beginning to filter through, so now seems an appropriate moment to analyse the impact of the updated rules so far. [Continue Reading]

Cities of the future

Horizon Scanning | 03 May 2019

The We Company recently announced new ‘future cities initiatives’ which will combine technology, data and real estate to ‘help address problems spurred by globalisation, urbanisation and climate change.’ The project will involve a team of engineers, architects, data scientists and biologists.

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The view from Carter-Ruck

Reputation Management, Risk | 03 May 2019

A letter from Carter-Ruck is something that every editor has learned to fear. As the potential precursor to a defamation action, the firm and its founding partner, Peter Carter-Ruck, became synonymous with libel thanks to their successful representation of numerous public figures – often prominent in business, politics, sport or entertainment. [Continue Reading]

What are the intellectual property challenges facing in-house legal functions in 2019?

Intellectual Property, Reputation Management | 03 May 2019

Intellectual property has become more and more important over the last two decades. No longer the domain of tech companies only it is something that all businesses should be thinking about, and, according to recent studies, it can make up around 80% of capital value in successful businesses. [Continue Reading]

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Secrets, lies and securities litigation

Litigation | 03 May 2019

The first an investor may hear about damaging wrongdoing within a company is when it is publicly revealed and the share price plummets. But usually the company itself will have become aware of allegations for some time, whether via a whistleblower or regulator probe. The paper trail created internally in gathering factual information for the company to seek its own legal advice can often become crucial in a later shareholder action, and the English disclosure and privilege regimes may allow claimants wider access to these documents than in other jurisdictions. On the flip side, claimants need to be wary of properly protecting the documents that they create in litigation from other parties. [Continue Reading]

Is it possible to manage a brand in the current online world?

Reputation Management | 03 May 2019

The way the internet works is an issue on everyone’s mind. The growth and power of massive social media platforms, fake news, online scams, how we as consumers receive and understand information and who controls this is mainstream news. These platforms have made it easy to get messages to a wide and international consumer base. Online marketplaces have made it far easier to sell products all over the world and to reach almost any customer, but they make illicit use easier and more accessible as well. [Continue Reading]