The twenty-sixth reform of the Spanish Criminal Code was passed on 22 June, by virtue of the Act 5/2010 which amended the Criminal Code 10/1995, of 23 November, even though we will have to wait until the end of this year for it to come into force.
Among the different changes that will result from the reform, special mention should be made on those affecting urban planning, along with the introduction of the criminal liability of the body corporate. The aforementioned reform likewise seeks to bring Spanish legislation in line with European practices. It is modelled on other jurisdictions and introduces a corporate performance model or "Corporate Dense".
The scandals in Spain over recent years have probably helped the reform of the Criminal Code to focus on the area of land and urban planning crimes. Therefore, while the penalties are increased on the one hand, the sphere of the typical conducts has been increased on the other hand and now includes illegal urban development works and the instrument of planning in the crime of urban planning breach of trust.
Increasing the penalties is the initial corrective measures introduced to avoid the crimes benefiting the author. The crimes are thus prevented from being “profitable” for their author and likewise, the earnings from any crime can be confiscated irrespective of how said earnings could have been transformed. The prison sentence will be increased from between six months and three years to range between one and a half years and four years. The penalty consisting of being banned from exercising their professional or trade (developers, builders or project manager) will also increase to a period between one and four years. In any event, the judge may also order the demolition of the work and the replacement to the original state of the altered physical setting (with the latter being an additional new feature with respect current Criminal Code), without prejudice to any potential compensation to third parties who have acted in good faith.
It is also under analysis that for the first time, the authorities and civil servants can be punished when they are in breach of their obligations or when they do not exercise their duties most diligently when studying urban development projects, plot division, licence applications, etc. The Criminal Code even specifies that failing to carry out compulsory inspection, along with the concealment of illegal act may be punished by a prison sentence of up to four years. Therefore, the civil servants have lost their privilege as they will no longer be to opt between a prison sentence or fine as the result of the current Criminal Code.
Furthermore, the most important new aspect of this reform of the Criminal Code, consisting of the inclusion of the criminal liability of bodies corporate, is included in the area of crimes against land and urban planning.
This is the first time that companies that tolerate or condone the criminal behaviour of their directors and/or employees are punished. This shall be irrespective of whether or not the criminal liability of the individual responsible for the beach can be individualised. The list of penalties for the bodies corporate range from a fine, include being banned from obtained subsidies and public grants, to penalties for the most serious cases that include the company being stopped from trading or even being forced to wind up. Along with the above, the aim is to try and prevent companies from getting round their legal liability by means of the different corporate restructuring allowed by the law, that is transformation, mergers, demergers, etc., by transferring the criminal liability to the company or companies in which they transform, merge, absorb or demerge, provided that the new company continues with the same activity as the previous one and has the substantial identity in terms of clients, suppliers and employees.
Notwithstanding the above, to prevent this reform from creating a legal loophole, certain guidelines and exemptions should have been included regarding the controls that the companies should apply to their directors and employees to prevent the companies form being criminally charged as a result of the acts of said persons. We therefore hope that our legal system incorporates in the medium term models and codes of conduct similar to those applicable in other jurisdictions (for example in North America) where codes of conduct are already in place that limit or even exempt the companies from any criminal liability.