Deferred prosecution agreements (DPAs) have finally arrived in the UK. As our colleagues at the Bribery Library have detailed in depth, the Crime and Courts Act 2013 creates a procedure whereby a prosecutor and an entity facing criminal prosecution may agree to defer prosecution provided the entity complies with specified requirements. For example, the agreement may require the entity to pay financial penalties, compensate victims, cooperate with investigations, or adopt or enhance compliance programs. DPAs will be available only to corporate entities, partnerships or unincorporated associations, and not to individuals.
Notably, the court will play a key role. While the prosecutor and the entity may negotiate terms, the prosecutor must apply to the court in a private hearing for a declaration that the proposal is reasonable and in the interests of justice before a final agreement is reached. Following final agreement, the prosecutor must again seek official court approval, this time in open court. The court also may have continued oversight so that prosecutors may raise instances of noncompliance before it.
This element of judicial oversight partly reflects a different view from the U.S. of what role, if any, prosecutors should have in recommending punishment. As reported last year in the Bribery Library (here), former Serious Fraud Office (SFO) Director Richard Alderman has explained that one challenge to obtaining DPA authority in the UK was that courts had clearly stated the SFO should play no role in setting penalties or sentences.
But as recently detailed by Max Stendahl in Law360, the UK’s articulation of a role for the courts may have the added benefit of helping preempt some of the criticism facing DPAs in the U.S. As Stendahl reports, the Justice Department has increasingly used DPAs and nonprosecution agreements (NPAs) in recent years. Justice Department officials and prosecutors have routinely defended these agreements (e.g., here) as valuable enforcement tools that help them achieve significant financial penalties and that impose stringent compliance measures at a lower cost to the government than if its only option was to prosecute. These agreements also help avoid or ameliorate the significant collateral consequences facing a corporation’s employees and shareholders when the corporation is charged with criminal misconduct.
Despite these arguments, DPAs in the U.S. have been criticized of late as allowing corporations off too easily and, as Stendahl reports, as lacking meaningful judicial involvement. In contrast with the UK approach, the Justice Department and the corporation negotiate agreements without court involvement, and ultimately there may be little the court can do about the decisions reached. By inserting courts into the DPA process, the UK may well avoid such issues. Only time will tell how the process plays out in the UK. Yet if nothing else, it seems likely the SFO will seize upon this new enforcement tool to investigate greater numbers of possible Bribery Act violations. We and our friends at the Bribery Library will be certain to watch.