On 18 June 2015, the Paris criminal tribunal rendered its judgment in one of the two cases that have reached French courts in relation to allegation of bribery in the context of the Oil For Food (OFF) program. In an important legal development, the Paris tribunal applied for the first time the principle that the double jeopardy guarantee would prohibit a second prosecution for the same fact where a Deferred Prosecution Agreement (DPA) had already been reached with a competent authority (in this case, the US Department of Justice). The precedent is extraordinary not only because it applies for the first the double jeopardy or ne bis in idem principle to a deferred prosecution agreement (rather than a final Judgment on the merit of the case) but also because it recognises a res judicata effect to the decision of a foreign authority.
The Oil for Food scandal
The OFF programme was instituted by the United Nations (UN) with
the stated purpose of relieving the suffering of civilians
resulting from UN sanctions on Iraq following Iraq's invasion
of Kuwait in 1990.
The gist of the OFF programme was to allow for the sale of Iraqi
oil by the Iraqi Government in exchange for food and commodities.
Companies that wished to buy oil or sell products in Iraqi were
under the obligation to make payment into a UN escrow account
rather than directly to the Iraqi government.
In 2000, a number of Iraqi officials sought to circumvent the OFF
programme by overcharging contracts by up to 10% and asking
companies to revert the overcharged amount to discrete bank
accounts. The money was then transferred to the Iraqi Central
Bank.
Oil for Food criminal proceedings
Following the publication of a report by a UN Independent
Inquiry Committee, several countries initiated criminal
investigations against companies identified as having paid
kick-backs outside the remit of the OFF programme.
The US Department of Justice (DoJ) was particularly active in that
regard. It entered into numerous guilty pleas and deferred
prosecution deals with US and foreign companies in exchange for
their admitting to having made illicit payments to the Iraqi
state.
In France, criminal investigation was initiated against a number of
French individuals and French companies in relation to similar
payments.
Double jeopardy and deferred prosecution agreements
The issue arising in the French OFF cases is that a number of
companies prosecuted in France had already entered into a plea
bargaining agreement or a DPA with the US DoJ in relation to
wrongdoings committed during the OFF programme.
Although foreign criminal judgments may have a res
judicata effect in France under certain conditions, the ne
bis in idem principle is generally understood to only become
operative when a defendant is acquitted or convicted by a court or
tribunal. In the first OFF criminal case, however, the Paris
criminal court ruled that the double jeopardy rule applied to a US
plea bargaining agreement insofar as the plea agreement resulted in
a conviction entered by a US court (Paris First instance tribunal
– criminal division, 8 July 2013).
The 'decision by a court' requirement may have proved more
problematic with DPAs, which consist in defendants agreeing to pay
fines and to implement corporate reforms without a finding of guilt
by a court. The fulfilment of the specified requirements of the DPA
results in the formal dismissal of charges.
Despite these differences, we argued in the second OFF case that
DPAs should prevent prosecutions for the same facts in France given
that, under US law, the fulfilment by a company of all the
specified conditions set out in the DPA, would bar the DoJ from
initiating proceedings again for same fact ("dismissal with
prejudice"). This, we argued, amounts to a form of res
judicata which should be recognized by foreign courts as
triggering the application of the ne bis in idem. We
further argued that failing to apply the double jeopardy principle
to DPAs would amount to a violation of the presumption of innocence
and of the right to fair trial insofar defendants who entered into
a DPA are prohibited from contesting the facts described in the DPA
in the course of foreign criminal proceedings relating to the same
matter.
The Paris criminal tribunal accepted our arguments and ruled in our
favour. It found that a DPA bars further prosecution before French
Courts. The tribunal specifically noted that:
- The defendant was being prosecuted for the same facts as those described in the DPA;
- the DPA - which has a res judicata effect under US law – was concluded within the context of independent, impartial and efficient proceedings which did not aim at enabling the defendant to evade criminal liability in other foreign jurisdictions;
- The defendant complied with its obligations and paid the criminal fine imposed by the DoJ;
- The facts did not violate essential French national interests.
The tribunal further noted that the DPA prevented the defendant
from effectively defending himself during French criminal
proceedings as a result of the obligation not to contradict its
acceptance of responsibility set forth in the DPA, which would
amount to a breach of the terms of the DPA. According to the
tribunal, this situation amounted to a violation of the presumption
of innocence and the right to fair trial of the defendant.
For all of these reasons, the tribunal decided to apply the double
jeopardy rule to a DPA, which is unprecedented in France.
Impact of the decision
Given the lack of coordination among anti-corruption enforcement
authorities, the issue of double jeopardy and prosecution deals has
become a growing concern amongst companies that are often facing
investigations in multiple jurisdictions.
This decision shows that French courts have become increasingly
aware of the unfair burden born by companies that are prosecuted in
several jurisdictions and have no choice but to pay significant
fines.
One can expect that, should the Court of Appeal affirm this
decision, it will create an incentive on the part of
anti-corruption enforcement agencies to enhance coordination and to
develop prosecutorial guidelines to implement the ne bis in
idem principle in transnational corruption cases. It might
also result in those agencies seeking to accelerate domestic
prosecutions with a view to avoid being prevented to proceed due to
a foreign plea agreement or DPA.
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