Criminal liability of the corporate entities was newly introduced in the Czech Republic by the Act no. 418/2011 Coll., on Corporate Criminal Liability (hereinafter the “Act”), which entered into force on 1st January 2012.
The Act is a special enactment of both material and procedural rules. It refers to the subsidiary use of the Criminal Code and the Code of Criminal Procedure, if such is not excluded by the nature of the rules in the mentioned codes (e.g. the rules regulating custody, which are inapplicable for corporate entities)
New principle of the Czech criminal law
The Act newly introduces the principle of transfer of criminal liability to an entity’s legal successor(s), including cases when an entity has more successors. In this case, before deciding on a sentence the court should take into consideration, among others, the volume of incomes or other advantages originated from the criminal activity which was transferred to each of the successor. (The accompanying report to the Act provides that the transfer of the criminal liability is applicable only in case of universal legal succession, with or without the cessation of the original entity. . In addition, the criminal liability transfer occurs objectively and regardless of the phases of criminal proceedings.)
Corporate criminal liability
Czech law shall govern potential criminal liability of a corporate entity, which has its registered seat, enterprise or branch in the Czech Republic or which carries out business activities or owns property in the Czech Republic.
The principle of universality
Czech law shall also govern the liability for criminal offence committed abroad and by the foreign corporate entity, if the criminal offence was committed in favor of a corporate entity with registered seat in the Czech Republic.
Criminal liability for offences related to money forgery and terrorism will be governed by Czech law regardless of the fact, whether the entity has its registered seat in the Czech Republic or in whose favor the offence was committed.
Liable corporate entities
The Act itself does not define what is a corporate entity. In addition to commercial corporate entities, also other legal entities such as professional chambers, political parties or churches may be subject to criminal liability.
The following legal entities are however completely excluded from criminal liability:
- The Czech Republic
- self-governing territorial entities upon the exercise of their or state’s public authority
The extent of the criminalization of corporate entity’s activity
A corporate entity may be sanctioned only for criminal offences expressively mentioned in the Act (Article 7). The exhaustive list of criminal offences committed by legal entities does not contain any criminal offences against life and health, which results in an exclusion of criminal liability for health-care facilities.
Conditions of the corporate criminal liability
A corporate entity is liable for a criminal offence, if:
the criminal offence was committed by the following persons as provided for in Article 8 par. 1 of the Act:
- statutory body or its member, or another person, who is authorized to act on behalf of the corporate entity
- person, who has a control or management function, although it is not the person mentioned par. a) (e.g. member of supervisory board)
- person, who exercises a major influence on the corporate entity’s management , if its action was one of the conditions of the origination of a consequence leading to criminal liability of the corporate entity (e.g. person authorized with the entity’s business management)
- employee or another person in similar position while fulfilling its employee’s duties, although it is not the person mentioned in par. a)
- The criminal offence was committed on behalf or in favor of the corporate entity or within the scope of its business activity.
- The offence may be imputed to corporate entity.
A criminal offence is imputable to corporate entity in cases, when the offence is committed by persons mentioned in letters a. to c. above.
If a criminal offence is committed by an employee, it can be imputed to corporate entity, if the offence was committed:
- on the basis of decision, approval or instruction issued by corporate’s authority or by any person mentioned in letters a. to c. above.
- because corporate’s authorities or persons mentioned in letters a. to c. didn’t adopt such measures, which they should have according by law or which may be reasonably expected from them. In particular, if the mentioned persons did not perform obligatory or necessary supervisory control over the activities of employees or other subordinate persons, or if they did not perform necessary measures to prevent or avert the consequences of the committed criminal offence.
A corporate entity may be held liable for a criminal offence even in case it is not possible to identify a natural person, who committed the offence. The law assumes, from the perspective of the principle ne bis in idem (not twice in the same), that the offences committed by the natural person and the corporate entity are different offences.
Indirect perpetration, which means the use of another corporate body or individual to commit a criminal offence, is also admitted by the Act.
SANCTIONING OF CORPORATE ENTITIES
Criteria for the determination of a criminal offence and assessment of the punishment
Apart from the common criteria already known in the Criminal Code (e.g. character and severity of the criminal offence), the Act introduces also new criteria, namely:
- The court will take into account, whether the corporate entity carries out an activity in the public interest, which is of strategic importance or which may be difficult to replace for the national economy, defense or security. (This provision however evidently breaches the principle of equality before the law).
- The court will take into account also the consequences of the punishment which may affectother persons. The court shall particularly take into account the legally protected interests of the damaged party or the interests of creditors of the corporate entity.
Types of punishments
Four types of the common punishments and two types of protective measures may be imposed as sanction on a corporate entity:
- Prohibition of activities
- Forfeiture of object or other tangible value
- Forfeiture of property
The Act also introduces four new sanctions specific for corporate entities:
- Liquidation of the corporate entity (if the activities of the corporate entity were focused on committing of criminal activities)
- Prohibition of fulfilment of tenders, participation in concession proceedings or in competitive bidding
- Prohibition of receiving of subsidies and subventions
- Publication of judgment (at the expense of the corporate entity)