The Role of Judicial Oversight in DPA Regimes: Rejecting a One-Size-Fits-All Approach

In late March 2018, the Canadian government released a backgrounder entitled Remediation Agreements and Orders to Address Corporate Crime that outlines the contours of a proposed Canadian deferred prosecution agreement (DPA) regime. DPAs—also appearing in slightly different forms such as non-prosecution agreements (NPAs) or leniency agreements—are pre-indictment diversionary settlements in which offenders (almost exclusively corporations) agree to make certain factual admissions, pay fines or other penalties, and in some cases assume other obligations (such as reforming internal compliance systems or retaining an external corporate monitor), and in return the government assures the corporation that it will drop the case after a period of time (ordinarily a few years) if the conditions specified in the agreement are met. Such agreements inhabit a middle ground between declinations (where the government declines to file any charges, but where companies still might forfeit money) and plea agreements (which require guilty pleas to criminal charges filed in court).

While Canada has been flirting with the idea of introducing DPAs for over ten years, several other countries have recently adopted, or are actively considering, deferred prosecution programs. France formally added DPAs (known in France as “public interest judicial agreements”) in December 2016, and entered into its first agreement, with HSBC Private Bank Suisse SA, in November 2017. In March 2018, Singapore’s Parliament installed a DPA framework by amending its Criminal Procedure Code. And debate is underway in the Australian parliament on a bill that would introduce a DPA regime for offenses committed by corporations.

The effect of DPAs in the fight against corruption, pro and con, has been previously debated on this blog. One critical design component of any DPA regime is the degree of judicial involvement. On one end of the spectrum is the United States, where courts merely serve as repositories for agreements at the end of negotiations and have no role in weighing the terms of any deal. On the other end of the spectrum is the United Kingdom, where a judge must agree that negotiations are “in the interests of justice” while they are underway, and a judge must declare that the final terms of any DPA are “fair, reasonable, and proportionate.” British courts also play an ongoing supervisory role post-approval, with the ability to approve amendments to settlement terms, terminate agreements upon a determined breach, and close the prosecution once the term of the DPA expires.

Under Canada’s proposed system of Remediation Agreements, each agreement would require final approval from a judge, who would certify that 1) the agreement is “in the public interest” and 2) the “terms of the agreement are fair, reasonable and proportionate.” While the test used by Canadian judges appears to parallel the U.K. model—including using some identical language—the up-or-down judicial approval would occur only once negotiations have been concluded. This stands in contrast to the U.K. model mandating direct judicial involvement over the course of the negotiation process.

The decision by the Canadian government to chart a middle course on judicial oversight is all the more notable given that an initial report released by the Canadian government following a several-month public consultation regarding the introduction of DPAs appeared to endorse the U.K. approach, noting that the majority of commenters who submitted views “favoured the U.K. model, which provides for strong judicial oversight throughout the DPA process.” Moreover, commentators have generally praised the U.K. model’s greater role for judicial oversight of settlements, especially judicial scrutiny of the parties charged (or not) in any given case, the evidence (or lack thereof), and the “fairness” (or not) of any proposed deal.

Despite these positions, one should not reflexively view the judicial oversight regime outlined in Canada’s latest report as a half-measure. Perhaps the U.K. model would be better for Canada, or for many of the other countries considering the adoption or reform of the DPA mechanism. But the superiority of the U.K. approach can’t be assumed, as more judicial involvement is not categorically better. Rather than a one-size-fits-all approach favoring heightened judicial oversight, there are several factors that countries might consider when deciding on the appropriate form and degree of judicial involvement in DPA regimes:

  • First, varying legal traditions can encourage differing roles for the courts in DPAs. For example, some countries’ approach to separation of powers (like that of the United States) is incompatible with direct judicial involvement in charging decisions and settlement negotiations. In Australia, this difficulty initially led the government to forgo proposing any mechanism for judicial approval of DPAs, but Australia later settled on a half-measure: DPAs will be reviewed by “approving officers,” retired judges appointed by the executive to five-year terms, who must disapprove DPAs if they are not “fair, reasonable and proportionate” and “in the interests of justice,” but who have no further responsibilities or powers. Strict preference for the U.K. model would foreclose this kind of creative addition to Australia’s DPA regime (or, perhaps worse, lead to the rejection of any DPA framework lacking heightened judicial involvement). Even putting formal legal rules to one side, countries may also vary with respect to legal norms related to the appropriate judicial role in DPAs. Judicial involvement in trials—as well as plea agreements and sentencings—varies widely country to country, and especially between common law and civil law systems. For countries with more restrained judiciaries, it would break legal norms for courts to take an overly-active role in DPA negotiations.
  • Second, tasking courts with additional responsibilities adds costs to the system and burdens on individual judges. In the U.K. model, courts are involved at many stages of the DPA process, including through reviewing preliminary negotiations. In nations with already-overburdened judiciaries, this might be a poor use of limited judicial resources in a broader struggle against crime and corruption, at least when a more limited judicial role, such as approval at the end of the DPA negotiation process, could suffice.
  • Third, empowering judges to reject or revise DPAs adds significant uncertainty to settlement negotiations; this uncertainty, at least in some systems, might undermine the goals that the DPA mechanism is supposed to advance. When judicial involvement is limited, companies can more reliably gauge the potential penalties involved in a given DPA. But if courts can reject settlements and even alter penalties, companies may see cooperation as inherently riskier and thus less attractive—leading fewer companies to cooperate or self-report violations. Countries with weak investigative capabilities—or weak laws addressing corporate liability—might be especially concerned about lowering incentives for cooperation. When such concerns are present, greater certainty of punishment through lesser judicial oversight may prove a better design.
  • Fourth, while judicial involvement can sometimes add legitimacy to settlements, the degree to which it does so will largely depend on the public’s confidence in its prosecutors and judges, respectively. The relative levels of trust may vary from country to country, and one shouldn’t simply assume that more judicial involvement always increases public confidence. After all, there have been instances where judges were at the center of widespread bribery. Indeed, it might often be easier to bribe a single (possibly retired) judge rather than a team of prosecutors. Even if such concerns are overblown, the fact remains that a single DPA design may not account for such cultural and criminal variations across countries.

No matter what animated its shift in thinking, the Canadian government appears to have taken a thoughtful approach to designing a DPA system – especially given that it had several models from which to choose and that it deviated from the majority of views detailed in its initial report. In specifically deciding on the degree and manner of judicial involvement, countries following Canada in designing DPA regimes would do well to take into account the laws, norms, and enforcement challenges unique to their societies rather than reflexively following a uniform, “more must be better” approach.

3 thoughts on “The Role of Judicial Oversight in DPA Regimes: Rejecting a One-Size-Fits-All Approach

    • Thanks, Jimmy. I’m not aware of any particular resource constraints or substantial problems with bribery in the Canadian judiciary that would push in favor of a less active role for judges. But the first and the third points could have led to the ultimate design here. On the latter, adding DPAs to Canada’s already robust legal regime is likely geared toward giving both prosecutors and corporate defendants another option in resolving disputes. Injecting judges too much, too formally, and too early into the process might have been seen as potentially self-defeating if it added too much uncertainty, especially when one big motivation for adding DPAs is giving companies a greater incentive to self-report violations.

      On the first point, it’s my understanding that Canada has less of a norm against the blending of powers (in contrast to the Australian and American systems) and that judges have some latitude to share their views on plea negotiations for individual offenders while they develop; the level of involvement varies from judge to judge. But with that norm in place, it might then have been odd to mandate — just for corporate resolutions — that judges formally approve negotiations at various points rather than serving as more as mediators until the final resolution. Ultimately, the Canadian government probably did not see the need to make the Remediation Agreement system depart too much from the system in place for individuals.

  1. Pingback: The Role of Judicial Oversight in DPA Regimes: Rejecting a One-Size-Fits-All Approach | Matthews' Blog

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