Corporate crime, multiple enforcement actions and the rule of international double jeopardy

For most companies, doing business today more often than not involves some level of international dealing. Globalisation can be great for business. But conducting business internationally can mean being subject to the laws of several countries, as well as any national laws with extra-territorial effect for conduct overseas. Therefore, one act or omission by a company may violate multiple laws.

There is a growing global trend of criminalising corporate regulatory offences. In both the UK and the US, criminal sanctions can be imposed for a variety of misconduct, such as market abuse, insider dealing, bribery and corruption, money laundering, breach of trade and economic sanctions, and anti-competitive behaviour. Penalties can include jail time for individuals and/or very large fines for both companies and individuals. In addition, conviction 
can mean civil and administrative 
sanctions including disgorgement of 
the proceeds of the criminal conduct 
or debarment from public tendering activities (among others).

Therefore, where multiple jurisdictions 
are affected, there is a risk of parallel 
and/or successive criminal enforcement actions. Compounding that risk is an unprecedented level of international 
co-operation between national investigatory and prosecutorial agencies, as well as 
inter-agency co-operation at a national level.

Companies transacting internationally should ensure that they have adequate cross-border compliance regimes in place. In addition, they should ensure they are equipped to deal with instances of possible cross-border illegality. How (and how quickly) companies react to issues that arise is increasingly seen to affect the penalties imposed.

Those dealing with possible cross-border illegality will have a number of important decisions to make, including whether, when and where to self-report. An obvious factor when considering the question of where to self-report, is which jurisdiction is more likely to consider offering a favourable settlement. However, another key factor, and one which receives surprisingly little attention, is the ‘international double jeopardy’ rule.

The ‘double jeopardy’ rule, found in national criminal jurisprudence in many countries, provides that no person should be ‘twice put in jeopardy of being convicted and punished for the same offence’. However, there is no international rule of law prohibiting prosecution for the same offence in different jurisdictions (international double jeopardy). A number of international bodies such as the United Nations and Organisation for Economic Co-operation and Development (OECD) have provided guidance on this issue, but they only go as far as to recommend consultation and co-ordination between countries. Unless a treaty is in place (as is the case between EU member states), the recognition of international double jeopardy is a matter for national discretion, and currently there is no uniform recognition that international double jeopardy applies to foreign judgments.

The UK and many European states do recognise international double jeopardy. The UK’s Serious Fraud Office (SFO) confirmed how this rule affects UK criminal prosecutions: ‘double jeopardy is likely to arise where there is, or has been, an investigation into the defendant’s conduct by another authority… overseas’ and ‘the essence of a criminal offence in England and Wales is the same as the offence for which the defendant already faces trial, or has been acquitted or convicted’.

An example of this rule in operation, is 
the case of DePuy International Ltd 
(DePuy). DePuy was a UK subsidiary of Johnson & Johnson (J&J), a US company. J&J self-reported to the US Department of Justice (DOJ) and the US Securities and Exchanges Commission (SEC) bribery by DePuy of foreign officials as well as other offences not involving DePuy under the US Foreign Corrupt Practices Act (FCPA). J&J agreed a Deferred Prosecution Agreement (DPA) with the DOJ which covered all these offences, as well as a civil sanction with the SEC, pursuant to which J&J would pay some $70m in criminal and civil penalties.

The DOJ informed the SFO of issues within its jurisdiction, and a criminal investigation was commenced in the UK into DePuy’s conduct as well as that of DePuy’s former marketing director, Mr Dougall. Mr Dougall was charged with the criminal offence of conspiracy to corrupt, and received a suspended jail sentence for co-operating fully with the SFO’s investigation and pleading guilty. DePuy, however, avoided criminal sanction in the UK altogether. The SFO found that because the J&J DPA had ‘the legal character of a formally concluded prosecution and punishes the same conduct… that had formed the basis of the [SFO] investigation’, the international double jeopardy rule prevented further criminal sanction in the UK. Instead, the SFO pursued a civil remedy, stripping DePuy UK of the proceeds of its criminal conduct. But, yet again, it took account of prior global settlements, including the US civil sanctions, and so sought to recover only part of the criminal proceeds (some £4.8m), instead of the full sum (some £14.8m).

Similarly, just this month, the rule of international double jeopardy was seen in operation in France. Criminal proceedings had been brought against 14 companies accused of paying bribes to foreign officials. Those companies were ultimately acquitted by the Paris Criminal Court. In its ruling, the court referred (among other things) to pre-existing DPAs which certain of the accused companies had agreed with the DOJ (as well as fines imposed by other US authorities), which it said meant that criminal prosecution in France against 
those companies was no longer possible.

In contrast, the US does not recognise international double jeopardy. It can prosecute criminal offences, notwithstanding a prior conviction for the same conduct in another jurisdiction. This is significant given the extra-territorial reach of the FCPA, and that the US is one of the most active enforcers of regulatory crime.

A company’s risk of multiple convictions is therefore affected by the jurisdictions involved. It is also affected by which country asserts ‘primacy’ over the case, which may result in other countries ceding jurisdiction. Again, there is no international rule governing the question of primacy, and so (absent treaty agreement) it is a matter for negotiation between the countries involved. The outcome can depend on the circumstances of the misconduct and investigations, as well as the likelihood of successful prosecution. Where misconduct is first reported, however, will often play some part.

There may also be political factors or country-specific trends to consider. For example, Transparency International UK has expressed concern over how multi-jurisdiction cases are dealt with in the UK where there is US involvement, noting a tendency of UK prosecutors to ‘not fully assert the primacy of [UK proceedings] when working alongside the DOJ’, even where there is strong public interest in arguing for primacy of UK courts. It noted that this might encourage defendants to ‘forum shop in the expectation that they can play jurisdictions against each other’. It has therefore called for greater transparency in the process of determining primacy.

Ultimately, dealing with possible cross-border misconduct will mean taking difficult decisions, often in a very short time frame. These decisions require careful analysis, on a case-by-case basis, of a number of important considerations, in particular whether, when and where to self-report. As explained above, that analysis should not focus only on which jurisdiction(s) may be more likely to consider favourable settlements, but it should take into account the global perspective, including which jurisdiction(s) are likely to consider themselves bound by the rule of international double jeopardy.

By Cara Dowling, solicitor-advocate, 
Bryan Cave, London, and 
Anita Esslinger, partner, 
Bryan Cave, Washington DC.