Week 7Criminal liability of Corporation The Herald of Free Enterprise caseIt does not make sense to present [this case] as the responsibility of a few individuals. A. Ashworth, Principles of Criminal Law (Oxford: OUP, 2009), 147In a case like this it can make good sense to hold that while the individuals involved may not bear a high degree of personal responsibility, together as a corporate enterprise they should carry full responsibility for what occurred. P. Pettit, Responsibility Incorporated, 117 Ethics 171 (2007), 171Corporate liability in England is a herald LOL not many other jurisdiction has done so.Question: Should corporation be punished:1) Are corporations autonomous entities?2) Can corporations act?3) Can corporations be at fault?4) Can corporations be deterred?5) Can corporations be effectively punished? If so, how?What are the models of corporate criminal responsibility?There is no single broadly accepted theory of corporate blameworthiness which justifies the imposition of criminal penalties on companiesC. Wells, Corporations and Criminal Responsibility, (Oxford: OUP, 2001), 84.

Natural and Corporate PersonalityA developed notion of autonomy is not solely on negative liberty: a developed notion of autonomy of individuals. Corporate activities now play a major part in individual and commercial life the criminal law has made increasing inroad in recent years.Financial and Service Market Act 2000Companies Act 1985-91. Statutory ApproachSection 18 of the Theft Act 1968, stating:Where an offence committed by a body corporate under section 17 of this Act is proved to have been committed with the consent or connivance of any director he as well as the body corporate shall be guilty of that offence: offenender

Corporate Manslaughter and Corporate Homicide Act 2007 An organisation to which this organisation applies is guilty of an offence if the way in which its activities are managed and organised:(a) Causes a person death and (b) Amounts to a gross breach of a relevant duty of care owed by the organisation to the deceased.

Senior management is defined in Section 1(4)(c)

2. Vicarious liability Problem of statutory interpretation No such doctrine in USA Culpa in eligendo as possible rationale delegation principle: where statue impose liability on the owner, license or keeper of prermise or other property, the courts will make that person vicariously liable for the conduct whom management of the premises has been delegated. Unsuitable for mens rea offences British Steel case: company was held liable for inadequate supervusion Coppen v Moore (No. 2) - American Ham as Scotch Ham Salemsan[1898] 2 QB 306 vs. Allen v Whitehead [1930] 1 KB 21: permit prosecute: owner twice a week visted. Vicarious liability operates in SL case where no fault, but not limited to no SL (Tesco v Natress 1972 case) Tesco 1993 case: Tesco supplied AV to child. Vane case doubted transfer from employee and agent. Only complete delegation. Seems not to respect the principle of individual autonomy, in so far as they hold people liable for something that was not their own voluntary act or omission.

3. Identification theoryA company may in many ways be likened to a human body. It has a brain and nerve centre which controls what it does. It also has hands which hold the tools and act in accordance with directions from the centre. Some of the people in the company are mere servants and agents who are nothing more than hands to do the work and cannot be said to represent the mind or will. Others are directors and managers who represent the directing mind and will of the company, and control what it does. The state of mind of these managers is the state of mind of the company and is treated by the law as such.Denning L. J. in H. L. Bolton (Engineering) Co. Ltd. v. T. J. Graham & Sons Ltd. [1957] 1 Q.B. 159, 172. But: manifestly at odds with the realities of the diffusion of managerial power in large companies and, more troubling still, could provide companies with perverse incentives to decentralise responsibilities so as to make it impossible to identify a senior individual or group of individuals in charge of any matter. E. Ferran, Corporate Attribution and the Directing Mind and Will, 127 LQR 239 (2011), 242 Tesco Supermarket Ltd. v Nattrass [1972] AC 153. - directing mind and will criterion suitable for mens rea offences. Against Trade Descriptions Act 1968 manager is not liable DPP v Kent and Sussex Contractor Ltd the defendant known to be false and using a false document with intent to deceive. Company held liable. direct mind and will Need of expansion by Lord Hoffmann in Tesco case in 1996: Meridan Global Funds Management Asia Ltd v Securities Commission. Court should be prepared to go beyond the people who represent the directing mind and will of a company and to enquire in the context of particular offence to enquire whose act or knowledge or state of mind what for the purpose. AGs ref declined to do so. R v Redfern: Sell arms to Iraq with embargo contrary to the Arm Control Order company itself with selling the arms. European sell managers not director employee his act could not be identified. 4. Aggravation theory: - The companys culpability is constructed out of the knowledge and the attitudes of its employees, that you recognised they are diffused with some liability- Aggregation needs to be seen as a recognition that individuals within a company contribute to the whole machine; it is the whole which is judged, not the parts. So the question would be whether given the information held amongst a number of responsible officers, it can be said that the corporation itself was reckless.Wells, cit., 156

employees knowledge does not have to be contingent on one individual employees satisfying the relevant culpability criterion.It straddle agency and holistic forms of liability. This has used in US but rejected in UKPROBLEMATIC: It is taken to mean that the fragmented knowledge of a number of individuals is fitted together to make one culpable whole. Needs to show individual within a company contribute to whole machine it is the whole which is judged. It is a matter of guesswork where D can foresee or intend the resultWhat if director say sth, other personnel do other thing?

5. Contextualism statutory interpretation: It is a question of construction in each case as to whether the particular rule requires that the knowledge that an act has been done, or the state of mind with which it was done, should be attributed to the company (Lord Hoffman, 511). Meridian Global Funds etc. v Securities Commissioner [1995] 2 AC 500: No unique criterion for the attribution of an action to the corporation;First, consideration of the internal decision-making structure of the corporation;Secondly, and most importantly, consideration of the purpose of the legal rule;But issue of fair notice.It is merely ordinary statutory interpretation no need to use identification doctrine

6. Holistic theory: move away slightly in viewing particular individual. A corporation is a detailed system of plans for human action (cf. Pettit, cit., 192)This system can be identified with the decision structure and policies (i.e., the culture) of the corporationDiverse and heterogeneous within amongst themselves. Corporation can be seen as diverse and heterogeneous policies structure both within themselves and they are independent existence.Criminal liability can be looked at whether an action is consistent with general public policies?An example: liability of Bribery Act 2010 s7 company liable failure to help bribery for failure to prevent due diligence offence, whole approach of company. UK only few manage can be liable -> widening primary liabilityWe dont think we are transacting with CEO of M&SIt should recogonise for employee that it can be flowed from corporate to employee

Tiger advance 1) identification is based on unwarranted assumptions about corporate managerial behaviour. Rules of liability should encourage management to have preventive systmes2) collateral estoppel: corporate liability is a means of promoting, encouraging, and facilitating civil recovery which would otherwise be inaccessible. 3) if route to top management, every corporate guilty plea put management at risk. -> favour large corporation -> help diffuse structure

French: philosophical model which justify imposition of liability on a company for the actions of its subordinate members. A corporations internal decision structures, its CIDs are seen as incorporating recognition rules. CID: organisational flow chart, procedural rules, policies.

Models involved:Corporate Manslaughter Act 2007 Identification theory (s 1(4)(c)) Aggregation theory (s 1(3) and(4)(c)) Holistic theory (s 8(3)(a))

S 18 No individual liability: An individual cannot be guilty of aiding, abetting, counselling or procuring the commission of an offence of corporate manslaughter.

Facts of the case(1) Only three convictions achieved so far; vs. several convictions for health and safety offences (see 172 cases, mostly fine s 33 Health and Safety at Work Act 1974) also in case of fatal accidents.(2) The convicted corporations are rather small: is the Act unsuitable for targeting larger corporations?(3) Counterintuitive relationship between the prosecution of the corporation and the prosecution of the members thereof: charges against individuals have been dropped.(4) But growing number of cases in the pipeline (investigations are complex).

CONS: Spill-over effect; Overkill effect; Can be swallowed up as business overheads (Ashworth, cit., 154)PROS: Easy to impose; Speak the language of corporations Deterrence; retribution; social benefit Corporate probation/remedial order Adverse publicity Community service Equity fines

Sentencing Guidelines: SERIOUSNESS - Foreseeability - Frequency of breach - Given manslaughter fine will seldom be less than 500,000 (but see the fines imposed so far) Mitigating vs aggravating factors - Efforts to remedy; - Acceptance of responsibility vs Failures in prevention CONSEQUENCES - yes: effect on employment - no: effect on shareholders - Turnover and end of business not decisive factors

Why have these grown:Nicola Lacey:1. Technological change: growth of technology: increased scope for huge disasters which caused so much harm that there is bound to be a strong social reaction. 2. Development in mass communications: where such disaster occur, everybody know.3. In attitude to both risk and responsibility: modern world people unwilling to accept gate. Some sociologist to argue that in the later modern world, we become increasingly aware of failings. Hearld sinking, CPS drop charge with Great Western train, contrary to public expectations. Emergence of social senses that corporate responsibility which is not a derivative of individually blameworthy acts. Question raised whether the law could develop a conception network of such law4. Growing social significance of cooperation, level of media reportingetc

Should company be guilty of a crime?Practical issues:Companies are criminal liable for deaths or serious harms this will create strong incentive on corporate managers to ensure that adequately safety systems are properly in place and adhered to. [Lacey]However, to other regulation and non criminal sanction will be a more effective way [Simpson]If company is more willing to make own up mistakes that have been made and open for discussion [Sillivian]

Can companies be morally responsible?Sullivan challenged the theoretical basis; companies are not moral agents who can be held. Those who reject argument of the kind Sullivan makes suggest that companies do have an existence that is distinct from any identifiable employee. Bucy & Wells: corporate ethos should be crated -> therefore hold company liable. Gobert and Punch: even if not moral responsible; a company can be held liable if to do promote another important of the criminal law avoidance of harm!

What form should it take?C Wells, 2001:

Individual responsibility vs group & individual entityCorporation are different from human beings, their activitiesCorporation are different.

1. Extending identificationRespondeat superior doctrine in US is too wide. UK direct liability scheme is seen as too narrow. Frenchs test tgat at least include anyone with a significant degree of autonomy with regard to making corporate decision and instigating corporate actions. actual responsibility rather than formal duty

2. Aggregation3. Holistic

Law Commission Report 2010:The weakness to the identification doctrine:Interpreting directing mind and willPinto and Evans: appears to be less a term of art than a matter of construction depending on contextBlackstone Criminal Practice: only close to board level can be identified it.Tesco v Nattrass case : directing mind

Inappropriate method: Smith & Hogan: identification doctrine is only applied in strictest sense. Professor Gobert: fails to capture the complexity of the modern company. By focusing on attributing the acts and states of minds of a limited range of senior people to the corporation, the identification doctrine fails to reflect the fact that in modern corporations a good deal of important policy or strategic decision making may be de-centralised. Clarkson: the doctrine ignore the reality of corporate decision-making which is often the product of the corporate policies and procedures rather than individual decisions. Difficulty: a method of establish corporate liability. Is that necessarily involves applying the same test to corporations of very different size unfair. Smaller companies director will have direct hand, easy to be prosecuted. Big boss hard to show the MR of fault mind. R v Pioneer case: liability can be escaped by completely effective method.

Individualism v CorporatismOnly individual can do things and so the law is right to concentrate its attention upon them; Indeed any other view might threaten the principle of individual autonomy by holding people liable when they did no voluntary act.

The weakness of this argument is that individual actions can often be explained fully only by reference to the social and structural context in which they were carried out. There can be no proper explanation of what was said and done. The behaviour of individuals is often shaped by their relationships to groups and collectives shaped in meaningful sense individual autonomy in lost in the process Alphacell Ltd v Woodward [1972]: law impose duty, fairer to convict a company, rather than into a river.

Not suggesting individual should not be prosecuted they should bear consequences for their conduct. In appropriate case they should do so. The companies should be opened to both civil and criminal liabilities. This create the structural context for the individuals conduct qua company officer.

The success of 2007 ActJ. Gobert: Prevailing identification doctrine: Pre 2007, MR. a person represented a directing mind and will of the company. 2007 Act appears to accept the concept of aggregation in limited form by its reference to senior management in s 1(3) and s1(4) senior management to persons who play significant roles in the making or carrying out of corporate decisions. Help solve major improvement of 2007 Act The category of senior management is doubtless more encompassing and realistic than the identification doctrines restrictions. Nevertheless, the 2007 Acts linkage of senior management to persons who play a significant role in the formulation of the doctrines preoccupation with individual rather than systemic fault. Under the Act, individual and directing mind were commonplace, now individual plays significant role is also unclear. WORDING OF ACT is not clear enough my thought leave it to case law? Factors: 1) how much of a role must an individual play in decisions making or managing before the role can be deemd to be significant. 2) With how large a part of an organisations activities must an individual be involved to satisfy the substantial part.3) Senior management, how to show they have constituted a substantial management? -> wrangling at different levels.

The change of law:Tesco v Nattress: too narrow. A small number of statues impose direct or vicarious liabilityNo general approach thoughCelia Wells emphasising the need to reassess the socio-political role of corporations and individuals within them.

Brent Fisse and John Braithwaite: the law should require a company which has caused or threaten proscribed harm to take its own disciplinary and rectifactory measures. The court would then assess the adequacy measures taken. Post hoc phenomeon. Prosecution will ask court to infer if it has been established remedial measures that it was autjpr of a harm causing act or omission. The whole orientation of the system would be different: every death caused, whether purely accidental or not, would be treated as potentially a serious offence until the company established otherwise. Penalty for special penaltiesrehabilitative: putting corporations on probation to supervise their compliance with the lawDeterrent: punitive injunction to require resources to be devoted to the development of new preventive measuresdeterrent mixed aims: community service by companies.

The Corporate Homicide Act 2007: very technical.

1. It applies to organisation which include companies, partnerships and various association and government departments. 2. The offence is only committed if the way activities are managed and organised by its senior management are breach of duty3. Senior management: it must focus on senior management s1(4)

Criticism:This model has not strayed far from identification system from common law. Doubtful if Tesco will organise such actThirdly, s8 of the Act directs jury to consider any alleged breach of health and safety regulations. Permits jury take evidence of attitude, systems, accepted practice. Evidence of corporate culture may be determinative.

The 2007 Act provides three type of sentence:Publicity order (requiring the organisation to make it known that it has been convicted of this offence)Remedial order (require offender to remedy the cause of homicide)Fines