GAB is pleased to welcome back Frederick Davis, a lawyer in the Paris office of Debevoise & Plimpton, who contributes the following guest post:
The principle that the state may not criminally prosecute the same defendant twice for the same conduct—known in most of the world as ne bis in idem (“not twice for the same thing”), and known in the United States as the prohibition on “double jeopardy”—is well-settled and uncontroversial, at least in Western democracies. Much more controversial is whether that principle protects a defendant prosecuted by one country from prosecution by a different country for the same (or closely related) conduct. This question is of particular importance in the context of transnational bribery, where the same conduct might violate the criminal laws of multiple governments. As I discussed in my last post, in Europe, a mix of domestic legislation, international treaties, and court decisions have established an international version of the ne bis in idem principle, providing companies with a reasonable assurance that if they are prosecuted in one European country, they are shielded from further prosecution in another. In contrast, in the United States the prohibition on double jeopardy has been consistently interpreted to prohibit only multiple prosecutions by the same sovereign. US laws thus offer no protection against re-prosecution in the United States after a prosecution abroad.
The power of US prosecutors to go after companies that have already been prosecuted in other countries is enhanced by other powers that European prosecutors can only dream about. As noted in an earlier post, a US prosecutor can pursue a corporation when anyone within that corporation can be shown to have committed a crime, giving the prosecutor considerable leverage. US prosecutors also have finely tuned procedural mechanisms, such as deferred prosecution agreements (DPAs) and non-prosecution agreements (NPAs), that are only tentatively being explored in other countries, such as the United Kingdom and France. The DOJ regularly asserts aggressive notions of its territorial powers, claiming, for example, that the use of dollars as the currency of an illegal transaction may subject the participants to US prosecution. US prosecutors have essentially unreviewable discretion their investigative decisions, because unlike many countries in Europe, criminal investigations (and, crucially, the decision to charge) are not supervised or reviewed by judges, as the DC Circuit has recently held.
Taken together, these circumstances risk causing two problems:
First, multinationals may well conclude that when their activities implicate the interests of multiple countries, US prosecutors will be the “ultimate arbiter” of the “adequacy” of criminal outcomes in other countries and will second-guess such outcomes even if the first country has a greater interest in the matter. Even non-US companies with few contacts with the US may thus be tempted to negotiate first with US prosecutors and deal with their home prosecutors later, to the annoyance of the latter. Second, the continued assertion of a perceived US “hegemony” may have unpredictable effects on relationships and cooperation with foreign authorities. In France, for example, the public discussion of the proposed revision to French law on bribery prosecutions (the so-called Loi Sapin II) includes frequent comments that the DOJ targets non-US companies for prosecution only in order to protect US economic interests, and additional French legislation to address perceived US overreach in this area is being considered.
In this context, it would be good international policy and sound common sense if the DOJ were to demonstrate not only that it is committed to cooperating with its foreign counterparts, but that even in the absence of a “double jeopardy” principle it will respect non-US outcomes reached in good faith. In this the DOJ falls short in two important respects:
- First, while the DOJ issues detailed “guidelines” on a number of subjects relative to pursuing corporations in general and to corruption investigations in particular, one can look in vain in its published material for any statement how it evaluates the “adequacy” of non-US outcomes and the circumstances under which it will defer to them. This does not appear to be an oversight. Rather, the DOJ seems to have found it difficult to articulate such standards, as revealed by the unusually vague comments senior officials have given when publicly asked for their position on this question. A senior DOJ official recently noted that the Department’s relationship with foreign prosecutors on this subject is a “work in progress” and that the DOJ will “concentrate resources” on “making cases in countries where you may see less activity on the country’s own part.”
- Second, the Department’s track record is not clear. In 2014, after a two-year investigation by the DOJ, the Netherlands company SBM Offshore announced that it had reached a negotiated outcome with the Dutch authorities; the next day, the DOJ announced that it would no longer pursue SBM – which caused the company’s shares to appreciate rapidly, and gave hope to European prosecutors that the DOJ would respect similar outcomes. More recently, however, the DOJ has indicated that the DPA signed with Dutch company VimpelCom – in which the DOJ and Dutch authorities split the relevant fines 50/50 – is its model of choice for multi-national prosecutions.
A disproportionate share of the largest FCPA results achieved by the DOJ affect non-US companies. In many, perhaps most, of those cases the underlying events could appropriately have been addressed by prosecutors in countries with greater contacts than the US, a result clearly contemplated by Article 4(3) of the OECD Bribery Convention. The DOJ is undoubtedly sincere in encouraging other countries to prosecute their corporate nationals. But unless it can clearly state its position on when it will respect the outcome of foreign prosecutions, and show that it will not always insist on being the “ultimate arbiter,” it risks inciting nationalist and potentially counterproductive reactions among its important trading partners.
Very interesting. It seems that what is going on might be described as competition between regulatory/prosecutorial standards (see Tim Buthe and Walter Mattli’s paper: The New Global Rulers: The Privatization of Regulation in the World Economy). We have different FCPA laws, both procedurally and substantively, between the US and Europe. In some situations, the two might reach different outcomes. Won’t corporate actors seek to comply with the higher standard, leading to a potential for a ‘race to the top’ in terms of behavior? Of course, this means that the DOJ standards would ‘win’ in the regulatory market, leading to, as you’ve noted, negative reactions from their European counterparts.
The US standards have ‘won’ in other regulatory battles, whether because they are heightened and US courts are willing to operate extraterritorially (Securities Law) or because they were the first out the gate (FAA rules). As you note, if the US is more aggressive in enforcing upon foreign corporations, the hegemony leads to unjust outcomes. But perhaps the strategy for resolving this distributional issue is not to push for double jeopardy, but rather to advocate for more even-handed application of US anticorruption laws, to both US and foreign corporations.
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