In a circular of 23 January 2014, the Ministry of Justice has summarised all the provisions of the law of 6 December 2013 relating to the fight against tax fraud and serious economic and financial crime1 .
Regarding the offence of money laundering, the circular notes "the reversal of the burden of proof for money laundering"2 and provides some long-awaited clarification. The illegal origin of goods or income is presumed if the conditions for the implementation of a transaction can only be explained by the intent to conceal said goods or income. The circular specifies that this new provision (Article 324-1-1 of the Criminal Code) "aims to better get to grips with the legal and financial structures that are devoid of any economic rationale and whose complexity is clearly only a means of preventing the movements from being traceable and hiding their origin".
The new provision had given rise to justifiable fears concerning its interpretation. The circular provides an important clarification in this respect, indicating that "this provision serves to relax the rules of evidence but does not modify the constitutive elements of the offence of money laundering itself. It does not therefore create a presumption of commission of the offence."3
In practice, therefore, it will be essential to be able to provide evidence justifying the contested transaction in order to counter the rebuttable presumption.
On 10 February 2014, the Minister of Justice presented to prosecutors and general prosecutors (procureurs généraux, i.e. prosecutors at the appellate level) her "action plan" regarding public prosecutors. The main text implementing this plan is the circular of 31 January 2014, which describes the new provisions applicable to relations between the Minister of Justice and public prosecutors.
The circular first refers to the Minister of Justice's responsibilities5, namely the implementation of the policy on crime determined by the Government through general directives addressed to public prosecutors. However, since the 25 July 2013 reform6 , the law expressly states that the Minister of Justice cannot give specific instructions in individual cases. As regards general prosecutors, in addition to leading and coordinating the activities of state prosecutors, they are to adapt the Minister of Justice's general directives to the context particular to their jurisdiction7 . In this respect, the circular specifies their duty to implement "genuine regional policies on crime that are coherent and concrete, in order to guide prosecutors in the lower courts".
Towards greater independence of the public prosecutor?
After recalling the role of prosecutors and the Minister of Justice, the circular specifies how the relations between the two should be coordinated.
Following the suppression of individual instructions, it is hoped that there will be a clear reduction in the number of cases reported up the legal hierarchy. The Minister of Justice thus aims for a 50% reduction in the number of reports by the end of 2014. The Ministry of Justice nonetheless intends to be kept informed of individual cases, notably in order to be able to "report on its actions before national representatives, in particular on the occasion of the publication of the annual report on criminal policy"8 . As such, "the Minister of Justice shall [in particular] have at his disposal concrete information coming from the courts which will allow him to implement the criminal policy defined by the Government".
The circular contains an annex defining nine criteria9 for the reporting of cases. Thus, cases that have to be reported to the Ministry of Justice are, in particular, cases of a certain degree of "seriousness", cases that produce "a clearly serious disruption to public order ", cases where "the personality of the offender or the victim" warrants such a report, or cases leading to "possible or actual media coverage of the proceedings".
The Ministry of Justice therefore intends to be kept regularly informed by general prosecutors, "in a comprehensive manner and in due course, of the most significant proceedings"10 . The latter must "exercise their role of analysing and synthesising" and "reply diligently […] to specific requests for information from the Minister". Since the 25 July 2013 reform, prosecutors have, for their part, been required to issue an annual report on criminal policy concerning the application of the law and general directives, as well as an annual report on the activity and management of their prosecution department and which they then transmit to the competent general prosecutor. These reports are made in addition to the separate reports issued either at their own initiative or at the request of the general prosecutor.
This does not, therefore, break the link connecting the executive to the public prosecutor which prompted the European Court of Human Rights, in particular, to decide that the public prosecutor was not a judicial authority. Time will show the extent of the changes brought about by the reforms.
Corruption: the requirements for associations to be authorised to exercise the rights of civil parties in criminal proceedings
A decree published in the Journal officiel on 14 March 2014 has stated the conditions under which anti-corruption associations may be authorised to exercise the rights held by civil parties in criminal proceedings [partie civile, i.e. alleged victims]11 .
Following the appointment of Eliane Houlette to the newly created position of Financial Public Prosecutor (procureur de la République financier – see our Bulletin dated 19 March 2014), this is a major step in the implementation of the law relating to the fight against tax fraud and serious economic and financial crime (see our Bulletin dated 7 November 2013).
To obtain authorisation, an association that focuses on anti-corruption issues according to its articles of association must have been in existence for at least five years12 , have taken actual, public action to fight against corruption and breaches of public integrity13 , have a minimum number of members14 , engage in non-profit, independent activity15 , and operate in due form in keeping with its articles of association16 .
In addition to the fact that the decree leaves significant room for discretion, questions may be raised about the authorisation process selected, given the objective of the reform.
Repentant criminals: a decree specifies the means for implementing the protection of repentant criminals
The National Commission for protection and rehabilitation, governed by the provisions of Article 706-63-1 of the Code of Criminal Procedure, and composed, in particular, of judges and members of the police and gendarmerie19 , can decide on proportionate measures, including, inter alia, measures regarding physical protection and location, aimed at ensuring the protection of repentant criminals20 . The Commission can also determine, if relevant, the measures for rehabilitation, taking into account the material and social situation of the person concerned and, if necessary, their family and relatives21 . If necessary, the Commission may propose the implementation of the procedure concerning assumed identities22 . It is seised by the prosecutor in charge of the case or, if required, by the investigating judge, who will then inform the prosecutor23 .
The Decree also specifies the procedure for use of an assumed identity. The President of the Paris tribunal de grande instance, seised at the request of the President of the Commission24 , has jurisdiction to authorise the use of an assumed identity25 . In the event of a refusal, the First President of the Court of Appeal has jurisdiction to rule on the matter26 .
When a repentant criminal behaves in a way which is incompatible with the implementation or the proper functioning of this measure, the authorisation will be withdrawn27 .
This decree applies to the perpetrators, and their accomplices, of the offences of corruption, influence-peddling and money laundering, as well as those charged with an attempt to launder money (in relation to which a reduction in, and exemption from, punishment has been introduced28 by the law of 6 December 2013 relating to the fight against tax fraud and serious economic and financial crime – see our Bulletin of 7 November 2013).
These provisions complement the law of 6 December 2013 favouring self-reporting and the reporting of criminals or their accomplices in return for a reduction in the punishment incurred by the repentant criminal. The protection offered by the measures contained in the Decree aims at reinforcing the efficacy of the new legal provisions.
The French Conseil Constitutionnel annuls two provisions on the grounds of lack of an effective legal remedy: appeal will now be possible against search and seizure warrants in investigations for undeclared work and against orders authorising the destruction of seized moveable property
In two decisions dated 4 and 11 April 201429 , the Conseil constitutionnel declared two provisions of the Labour Code and the Code of Criminal Procedure unconstitutional, on the basis of Article 16 of the 1789 Declaration of the Rights of Man and the Citizen.
The last Article of the Declaration formally announces that "any society in which rights are not guaranteed, nor the separation of powers defined, does not have a constitution". The FrenchConseil constitutionnel has inferred from this that all persons have the right to an effective legal remedy, which cannot be substantially infringed30 .
In the two decisions mentioned above, the Conseil constitutionnelconsidered that the lack of any judicial remedy against a decision that affects a person is, in principle, a substantial infringement of this right.
The decision of 4 April 2014 related to Article L.8271-13 of the Labour Code, which permits police officers, in the context of preliminary investigations into infringements of the prohibition on undeclared work, to conduct house inspections, and searches and seizures of potential evidence at places of work, following an order of the president of the tribunal de grande instance with jurisdiction over the place to be inspected. The claimant relied upon the lack of clarity regarding the judicial remedy available, as well as the absence of a right of appeal against an order authorising inspections, searches and seizures. The Conseil constitutionnel observed that the persons targeted by the order had no means to challenge it. Indeed, the order could only be challenged by triggering public prosecution. The Conseil constitutionnel judged that the aforementioned provision of the Labour Code did not conform with the requirements of Article 16 of the 1789 Declaration. The repeal of the provision was fixed to take place on 1 January 2015 in order to give the legislature sufficient time to rectify its unconstitutionality.
In the decision of 11 April 2014, the challenge related to the fourth paragraph of Article 41-4 of the Code of Criminal Procedure. This provision, which deals with the fate of seized goods after a case has been dropped or when the last court seized no longer has jurisdiction, allows the public prosecutor to order the destruction of seized movable property where its conservation is no longer necessary for establishing the truth and the law classifies the goods as dangerous or harmful or their possession as illegal. Here, again, the Conseil constitutionnel held that this provision did not provide for the owner or third parties with rights over the goods to challenge the decision and that they were not even informed of the planned destruction. The Conseil constitutionnel therefore held that there was an absence of a legal guarantee, infringing Article 16 of the 1789 Declaration. Paragraph 4 of Article 41-4 has therefore been repealed as of the date of the decision and will be amended31 .
The importance of the constitutional right to an effective judicial remedy has thus been emphasised twice by the members of the Conseil constitutionnel. These decisions also highlight the existence of various situations in French law in respect of which sufficient legal guarantees are still lacking.
European Union: adoption of a directive requiring certain businesses to disclose non-financial information – efforts to fight corruption in the light of day
On 15 April 2014, the plenary session of the European Parliament adopted the Directive on disclosure of non-financial and diversity information by certain large companies and groups. The legislation modifies the accounting directive in force in the European legal landscape since 19 July 201332 .
In the context of a crisis which, as well as being economic and financial, is also social, environmental and political, and in which the legitimacy of businesses, like political decision-makers, has been questioned, the Directive aims to increase the transparency, responsibility and performance of certain companies, and to diversify the composition of boards of directors and supervisory boards.
The new Directive requires large firms33 that are public-interest entities34 of more than 500 employees to include, in their management report, a declaration including substantial information addressing, at the minimum, environmental, social, personnel, human rights and anti-corruption issues35. The declaration must, in addition, include a description of a) the group's business model, b) the policy pursued by the group in relation to those matters c) the outcome of those policies, d) the principal risks related to those matters. Furthermore, a subsidiary is exempted from the obligation if it, and its subsidiaries, are included in the consolidated financial statements or a distinct management report of another company.
The new Directive also requires listed companies36 to provide a description of the diversity policy applied in relation to the undertaking's administrative, management and supervisory bodies with regard to aspect such as, for instance, age, gender, and educational and professional background37 .
The stated objective of the Directive is to increase the relevance, consistency and comparability of information disclosed by companies across the Union38.
Certain large groups have already welcomed the provisions of the new European legislation, while others have criticised the initiative, arguing that efforts in the field of corporate social responsibility can only be effective if made on a voluntary basis39.
Corporate criminal liability: a reminder from the French Supreme Court (Cour de cassation) of the need for the offence to be attributed to a specific decision-making body or representative
The extension of the criminal liability of legal entities following the introduction of the law of 9 March 2004 has been the object of much comment, mostly focusing on the conditions for its application and the attribution of the criminal acts to an individual.
The text of Article 121-2 of the French Criminal Code is unequivocal, stating that "legal entities, with the exception of the State, are criminally liable […] for offences committed on their behalf by their decision-making bodies or representatives". It follows that a legal entity may not be held liable if no offence was committed by a decision-making body or representative. In principle then, the Criminal Code protects legal entities from liability for wrongdoing that cannot be directly attributed to a natural person who is a representative or part of a decision-making body40 .
And yet on a number of occasions, in decisions issued by both the appellate courts and the Supreme Court itself, the French courts have strayed from the letter of this Article. Certain legal commentators have regarded these decisions, which have attracted a great deal of commentary, as establishing direct liability of the legal entity, without the need for the offence in question to have been committed by a natural person who carried out the relevant acts.
This was the case, for example, in a judgment issued on 26 June 2006 in which the French Supreme Court found, in order to convict a company for manslaughter [homicide involontaire], that "the offence could only have been committed, on behalf of the company, by its decision-making bodies or representatives"41 . The judgment thus seemed to introduce a presumption of attribution to the decision-making bodies or representatives of the company. Again, in a judgment dated 25 June 2008, the Supreme Court upheld a Court of Appeal decision holding companies liable for forgery and aiding and abetting on the ground that "the offences fit within the framework of the companies' business policy and thus could only have been committed, on behalf of those companies, by their decision-making bodies or representatives"42 . The reference to business policy removes the issue still further from any connection to a decision-making body or representative and seems to view the legal person itself as being an entity capable of committing an offence.
Nevertheless, more recent decisions seem to have returned to the letter of Article 121-2 of the Criminal Code and the Supreme Court has overturned appellate judgments that failed to identify the commission of offences by an individual43. Asked to consider an urgent question of compliance with the French Constitution, the Supreme Court reiterated that the criminal liability of legal persons "could only be incurred for offences committed, on their behalf, by their decision-making bodies or representatives"44 .
A recent judgment issued by the French Supreme Court on 1 April 201445 has confirmed this trend. In this case, the Court of Appeal had found a company liable for counterfeiting through sales via its paper catalogue or online, on the basis that it was an informed professional capable of putting in place warning systems regarding non-compliance with third party rights and yet had produced an identical version of the protected model. The decision was overturned under Article 121-2 of the Criminal Code on the basis that the Court of Appeal had not sought to determine which decision-making body or representative had committed the offence on behalf of the legal entity.
It is possible then that the approach taken by the Supreme Court signals a return, without exception, to the strict letter of the Article. Furthermore, the Criminal Chamber of the Supreme Court again reaffirmed this approach in three recent decisions of 6 May 201446 , in which the Court overruled a number of appeal judgments which found companies liable for accidental injury and manslaughter (blessures et homicides involontaires) following workplace accidents. For some, liability by inference may continue to be applied in circumstances indicating with certainty that the decision-making body or representative was at the origin of the offence. However, the trend in recent decisions shows a tendency to require a specific individual to be identified as the perpetrator, and it remains the case that the courts have never expressly held that a legal entity is itself directly liable.