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A Rule of Law Webathon

Lawyers Around the World
Around the Clock for the Rule of Law
A Rule of Law 24-hour Webathon – 4/5 May 2021

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The Rule of Law is not merely the stock and trade of lawyers. It is our core value, the fulcrum of our profession and the polestar of our activity.  It is the social fabric that undergirds human rights, democratic principles, economic opportunity, social development, and the fundamental freedoms we all recognise as self-evident.  And with the world now facing unprecedented challenges, lawyers remain the first line of defence against efforts to undermine, circumscribe, or defeat the Rule of Law.  To underscore the critical importance of that mission, and the unwavering commitment shared by lawyers around the world, we have chosen to come together in an extraordinary way.

Three of the world’s major international lawyers’ associations — AIJA HRC (Association Internationale des Jeunes Avocats Human Rights Committee), UIA IROL (Union Internationale des Avocats Institute for the Rule of Law), and ABA SIL (American Bar Association – Section of International Law) – have joined forces to launch the first 24-hour Webathon in defence of the Rule of Law.

We are proud to present a continuous series of two-hour panel discussions that will move like the sun across the planet, spanning continents and time zones. 

Each panel will address a different aspect of the challenges faced by the Rule of Law and will be hosted by a leading bar or international law association,  including: the Law Society of England and Wales, the Barcelona Bar Association, Barra Mexicana de Abogados, the Inter-American Bar Association, the American Bar Association, the California Bar Association, the Law Council of Australia, LAWASIA, the NUPL (Philippines), the Society of Indian Law Firms, the Bar Association of India, the Deutscher Anwaltverein, the Warsaw Bar and the Paris Bar.

TheWebathon will roll from 2:00 PM GMT on 4 May through 2:00 PM GMT on 5 May.

* * *

The last panel will be hosted by the Paris Bar and will take place on May 5, 2021 from 2:00 to 4:00pm (CEST). It will be held in French and in English and will be translated live. It will focus on the issue of justice amid military conflict, particularly on whether the Rule of Law goes out the Window in times of war.

Programme of the Paris Bar panel:

Moderator: Stéphane de Navacelle, AIJA HRC Co-Chair; Former Member of the Paris Bar Council (Co-Président du Comité des droits de l’homme de l’Association internationale des Jeunes Avocats (AIJA); Ancien membre du Conseil de l’Ordre des Avocats de Paris).

Speakers:

  • Marie O’Leary, Counsel, International Criminal Court (Avocat, Cour pénale international);
  • Matthieu Bagard, Paris Bar Attorney, Avocats Sans Frontières France Secretary (Avocat au Barreau de Paris, Secrétaire, Avocats Sans Frontières France) ;
  • Ghislaine Doucet, Doctor of Law, specialized in international humanitarian law, terrorism and international criminal law, Senior Legal Advisor to the ICRC Delegation in France (Docteur en droit, spécialisée en droit international humanitaire, terrorisme (DIH) et en droit international pénal, Conseiller juridique principal de la Délégation du CICR en France) ;
  • Amélie Férey, Postdoctoral researcher (CERI), IRSEM resident (Chercheuse postdoctorale au Centre de Recherches Internationales de Sciences Po (CERI), résidente à l’Institut de Recherche stratégique de l’École Militaire (IRSEM)).

Closing remarks: Olivier Cousi, President of the Paris Bar (Bâtonnier du Barreau de Paris).

GMT

Local time/date

Local organization

Panel

14:00

 

15:00 – 17:00
(BST) – May 4

Law Society of England and Wales

Panel # 1 – Rule of Law Colloquium: Why Is the Rule of Law Relevant Today and What Can We Do to Protect it?

16:00

18:00 – 20:00
(CEST) – May 4

Barcelona Bar Association

Panel # 2 – Gender Equality and the Rule of Law: Two Sides of the Same Coin.

18:00

13:00 – 15:00
(CDT) – May 4

Inter-American Bar Association – IABA

Panel # 3 (in Spanish) – Rule of Law and Democracy: Challenges of Fragile Systems in the Americas (Venezuela, Argentina, Mexico and Others)

20:00

16:00 – 18:00
(EDT) – May 4

American Bar Association, International Law Section

Panel # 4 – Developing Strategies and Programs to Support the Rule of Law.

22:00

15:00 – 17:00
(PDT) – May 4

California Bar Association

Panel # 5 – Attorney Discipline and the Independence of the Bar: Should Courts Play a Role?

00:00

10:00 – 12:00
(AEST) – May 5

New South Wales Council for Civil Liberties

Panel # 6 – Black Lives Matter: an Australian Perspective.

2:00

11:00 – 13:00
(JST)
10:00 – 12:00
(CST) – May 5

LAWASIA

Panel # 7 – Electoral Democracy and the Rule of Law.

4:00

12:00 – 14:00
(PHST) – May 5

National Union of Peoples’ Lawyers (NUPL, Philippines)

Panel # 8 – Persecution of Lawyers by State Actors: The Role of the International Bar.

6:00

11:30 – 13:30
(IST) – May 5

Society of Indian Law Firms (Silf) & Bar Association of India

Panel # 9 – Corporate Social Responsibility: Changing Perspectives to recognize Rule of Law and Human Rights as Essential Components of Good and Fair Business Environment.

8:00

10:00 – 12:00
(CEST) – May 5

Deutscher Anwaltverein

Panel # 10 – Access to Justice for Refugees During COVID – past, present and future.

10:00

12:00 – 14:00
(CEST) – May 5

Warsaw Bar

Panel # 11 – The Role of Lawyers in Protecting the Judiciary.

12:00

14:00 – 16:00
(CEST) – May 5

Paris Bar
Barreau de Paris

Panel # 12 (in French) – Justice Amid Military Conflict: Does the Rule of Law Go Out the Window in Time of War?

Justice et conflit armé : L’Etat de droit passe-t-il à la trappe en temps de guerre ? (en français)

Report on the interests at play in relation to the status and the role of the “investigating” lawyers in internal investigations

Stéphane de Navacelle, Partner Navacelle, co-author with Paris Bar immediate past Vice-President Basile Ader (August Debouzy) and contributors Thomas Baudesson (Clifford Chance) and Jean-Yves Garaud (Cleary Gottlieb Steen & Hamilton LLP) of a “Report on the interests at play in relation to the status and the role of the “investigating” lawyer in internal investigations”.

Read report

Judge-lawyer-legal counsel (MAJ) – Training session 2 on internal investigation

Stéphane de Navacelle, participates under the auspices of the ENM – Ecole Nationale de la Magistrature, AFJE – Association Française des juristes d’entreprise and EFB – Ecole Française du Barreau, with the scientific support of the IHEJ.

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7 May 2021

Lawyers Around the World – Webathon on the Rule of Law

Stéphane de Navacelle, AIJA HRC Co-Chair, participates as a moderator to the first Webathon in defence of the Rule of Law on the issue of justice amid military conflict, particularly on whether the Rule of Law goes out the Window in times of war.

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5 May 2021

Who’s Who Legal – Future Leaders in Investigation in 2021

Clémentine Duverne recognized based on independent research with clients and peers carried out by Who’s Who Legal (WWL) and Global Investigations Review (GIR) as a future leader in Investigation in France in 2021.

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26 April 2021

Recent developments on corporate criminal liability in France and EU legal cooperation in cross border investigation

Recent developments on corporate criminal liability in France
and EU legal cooperation in cross border investigation

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On April 20, 2021, Julie Zorrilla and Stéphane de Navacelle spoke to recent developments on successor company corporate criminal liability, Plea Bargaining and DPAs in France as well as EU legal cooperation in cross border investigation at the invitation of the American Bar Association International Criminal Law and International Anti-corruption committees.

Stéphane de Navacelle: For this presentation, we thought we would address three issues which are relevant for our group.

(i) The first one is a decision by the Supreme Court when it comes to the criminal liability transfer of the surviving entity. Up until this recent decision, the liability would die with the corporate and very often, we would find ourselves in challenging positions in criminal procedures, keeping corporate entities artificially alive or for the purpose of the investigation, so we didn’t seem as if we were trying to elude liability. Now the situation is much clearer, in the sense that it will not have any effect on criminal liability. You can find that in the compliance programs expectations – when it comes to the due diligence that is warranted in M&A – which are set forth by the French Anticorruption Agency, it really opens a whole new area of concern for practitioners and we can see it shift, to quite some extent, from the investigation defence work to M&A anticorruption compliance checks.

(ii) The second issue is one of concern for anyone working on plea deals in France. It concerns the rejection of plea deals for individuals by a Paris court in a prominent corruption case, while the DPA for the corporate was approved by the homologation judge. That refusal to homologate cannot be appealed. In effect, the PNF has lost a lot of its bargaining power. It does tell you something about judges’ lack of approval of these very recently introduced plea deals.

(iii) The last issue is a new example of the effective use of EU legal cooperation mechanism to dismantle crypto-network EncroChat.”

 

I.  Criminal liability transfer in case of a merger and acquisition of a public limited liability company

Stéphane de Navacelle: “On November 25, 2020, the French judicial Supreme Court ruled that in the event of a merger by acquisition of a public limited liability company, the criminal liability of the acquiring company could be incurred for acts committed by the acquired company before the merger. It is however expected that it will be broader than just that.”

The acquiring company can only be condemned to a financial sanction such as a fine or asset forfeiture.

Except if the merger is solely designed to avoid criminal liability of the acquired company, financial sanctions may be combined with additional sanctions (dissolution of the company, ban from public procurements, etc.).

“It really enhances the need for proper due diligence. We have seen case law increase and geographically move to investments that took place in Africa post 2008-2010 crisis, when there was a rush of growth and probably insufficient due diligence. That’s sort of coming back to bite those investors who likely overpaid if the turnover was allowed thanks to inappropriate payments or fraud.

The decision is a landmark in France because in many ways, it breaks with the traditional view of corporate criminal liability. It is surviving the death of the corporate. It’s creating a system that is really distinct from physical people as compared to moral entities.”

Key takeaways: Specific caution and due diligence.

 

II. Rejection of plea deal by French court in a prominent corruption case

Julie Zorrilla: “We would like to talk about another recent French caselaw in white collar crime.

In a recent matter dated January 26, Vincent Bolloré, one of the richest businessmen in France, appeared before a Homologation Judge to homologate a plea deal and settle allegations of corruption and embezzlement involving public procurement contracts in Togo.

Before going into details regarding the facts and events of this case, I would like to give you some context regarding the applicable legal framework in such context.

As you may know, French criminal law does not have a very long-standing tradition of negotiated justice. Basically, in France we currently have a French guilty plea and a DPA.

The French guilty plea (“Comparution sur Reconnaissance Préalable de Culpabilité” or “CRPC”) was first introduced in 2004 for minor offenses. It then was broadened in 2011 for a wide scope of criminal offences, including white-collar crimes. The French guilty plea is applicable to both natural and legal persons and allows a defendant, in exchange of his acknowledgement of guilt, (1) to strike a deal with the Prosecutor and (2) to be offered a reduced sentence (which cannot exceed half of the prison sentence incurred, nor can it be more than 3 years). Once the Prosecutor and the defendant agree on a sentence, the CRPC agreement must be homologated by a Judge.

This guilty plea is and will be over time, more and more used alongside the French DPA. The French DPA which stands for “Convention Judiciaire d’Intérêt Public”, or “CJIP” was implemented in 2016 by the Sapin II Law. It is a mechanism applicable only to companies in cases of offences against probity. Indeed, if a CJIP can bring an end to legal proceedings initiated against legal persons for probity offences, private individuals (such as current or former executives or employees involved in the allegations) can still find themselves criminally liable before French Courts for the same offenses.

The procedure of CRPC thus appears to be an alternative to a traditional court hearing for these private individuals when the legal entity carries out an internal investigation in order to conclude a CJIP which, according to the guidelines of the French National Financial Prosecutor Office (“PNF”), must establish individual liabilities. 

In the case at hand, this is exactly what happened: the CRPC of Vincent Bolloré was negotiated while his companies settled a CJIP.

This case is very interesting as after having Mr. Bolloré publicly acknowledge his guilt in Court before the Homologation Judge, the Judge refused to homologate the CRPC agreement as he held that the conduct of Mr. Bolloré “seriously undermined the public economic order” and “undermined Togo’s sovereignty”. Thus, according to the Judge, this conduct warranted a public trial.

As the Judge refused the homologation, the case will consequently be referred to trial.

In principle, if a CRPC fails to succeed, the Parties are not allowed to report any information about the CRPC procedure during a subsequent trial.

However, and due to (1) the high-profile nature of the defendant, (2) the fact that the Homologation hearing, and (3) the fact that the acknowledgement of guilt was widely reported in the press, one can wonder how the Judges at the subsequent trial, could ignore these elements when judging Mr. Bolloré.

As we must explore all possible options with our clients, we thought that it could be interesting to share with you this case law. Thus, it should be kept in mind that there is a risk to a public acknowledge of guilty when negotiating a plea agreement in France.”

Key takeaways: Take this risk into account when negotiating a plea agreement in France and explore all possible options.

Stéphane de Navacelle: “Thank you Julie. I think when you look at it from a US perspective, it must be mesmerizing to think that all the work that you have done, your investigation as a lawyer for the corporate and so on, can virtually be set aside by an independent judge down the road.

We are dealing with one of the wealthiest individuals in France who has an empire, as we say it in France, in transportation and media and controls a great number of major ports in West Africa and therefore goods going in and out, and so on. (…) The maximum fine for an individual under the statute was 375,000 €, a very limited amount given net worth, who was worth several billions. We have mentioned in the past how these laws are very recent and there is very little case law to turn to. The judges generally feel that there is, in this criminal law compromise, compromission, i.e., something ugly.

Here, they agreed to a deal, they had run a deal with the judge who was on board with the homologation. There was probably a large pressure on the judge not to approve ultimately the deal which may have led to him recusing himself. This also poses a real issue from an ethics perspective. If you knew before going in that you were going to refuse the deal, was it  ethical in terms of due process when you know that the individuals are going to have to face trial after conceding to guilt.

But, ‘voilà’, France is learning the hard way from Mr. Bolloré. It’s not because you have a very clear policy coming from the highest authorities in France that you will have every judge on board with your plan. This is something that we repeatedly warn our clients about when we start working on these deals, but now we have a perfect case to point to. In a cross-border context, I think this is much less likely and it sort of refers back to the fact that we adopted in 2016 our own FCPA, ‘Sapin II’, really to make it as a useful tool in cross-border contexts.”

Question: “Ordinarily in the United States, the prosecutor will speak for the plea bargain. Did they speak in this case? Did they argue forth?

Stéphane de Navacelle: “Yes they did. Because of the substitution of the homologating judge, the PNF himself – the head of the national financial prosecutors – came to defend the deal at the hearing. Instead of having one of his deputies do that as it would ordinarily be the case. As Julie mentioned, this decision cannot be appealed. The PNF did not appeal but attacked the decision as an abuse of power. So basically, it’s a prosecutor challenging the decision before the Supreme Court.

The prosecutor’s challenge relies on the facts that the homologation decision of the DPA, refers to the entire deal, including the CRPC – the plea bargaining – for Mr. Bolloré and the two other individuals. It reflects that it is likely that the judge changed the ruling part of the decision but not the description. It’s on that basis that the prosecutors are appealing the approval decision, that it is an abuse of power because the three plea bargaining of the individuals and the DPA were part of a global package. Obviously, no law provides for a global package. It will be interesting into seeing how the Supreme Court will navigate between legal rational and realpolitick.

 

III. Effective use of EU legal cooperation mechanism lead to dismantling of crypto-network EncroChat

Stéphane de Navacelle: “Some of you may have seen we now have an operational European prosecutor who was an amazing anticorruption Romanian prosecutor. She has announced that she will be operational on June 1st with several prosecutors from each of the EU countries involved (…).”

“We thought it would be interesting for us, from a procedural point of view, to talk about the EncroChat case, which anyone in the UK knows about quite well. Encrochat is an encrypted mean of communication allegedly used solely by criminal organizations. Basically, Encrochat does what Signal and Telegram do, but with the hardware as well. Basically, if you use their hardware as well as their software, you will have the encryption in the hardware, so the enforcement authorities or whoever wants to access your information first has to actually access the hardware before the information is deleted from the hardware, which is almost impossible.”

The Encrochat servers were based in France and the French authorities were able to hack the EncroChat encrypted network which was hosted on servers located in France, through obtaining a device before everything was deleted from it. The product of that led to hundreds of arrests because thousands of phones were used in the UK, mostly by drug dealers. In effect, the gendarmerie was recording to all of those conversations live.

Key takeaways: Hundreds of successful and coordinated arrests in several countries.

We have been involved in one of the numerous cases, trying to deconstruct, in a sense of trying to understand how the corporation worked. This is still a developing matter so we don’t know exactly know what is going to come out of it. What is certain is that at least one UK Court has approved the way that the cooperation between the Europeans authorities worked. In this instance, the hacking of the EncroChat encryption network resulted from a joint effort from French and Dutch authorities which formed a Joint Investigation Team (JIT) between judges, prosecutors and law enforcement authorities. These JITs are put together for specific purposes and for a limited period of time and they are supported by agencies such as Europol and Eurojust to provide logistical support.

Our sense is that one of the consequences of this is that due process and the rights of the defence have been trampled in a way. This obviously raises a lot of concern amongst the European defence bar. In this specific matter, the UK judge considered the fact that the French authorities accepted the way the information was collected as appropriate. If it was good enough for the French, it was good enough for them. But the French were not using it in French courts. The phones were not used in France so they did not have the same obligations in terms of due process.

The UK issued a European Investigation Order (EIO) to France in 2020 to obtain evidence already collected as part of this EncroChat investigation. It is a judicial decision which has been issued or validated by a judicial authority of a Member State to have one or several specific investigative measures carried out in another Member State to obtain evidence in an ongoing criminal investigation.

Key takeaways: usefulness of this legal cooperation mechanism to conduct efficient and speedy investigations in the context of cross-border crime.

We see here a trend that is similar to the one we have seen in the European arrest warrants, where because the request comes from another EU country, the diligence and the due process pros are virtually – ‘voided’ would be too strong – impeded upon. That’s extremely worrisome.

ABA International Criminal Law Committee monthly Call, 20/04/2021

France Culture – Lawyer, a profession that diversifies

Julia Minkowski, Partner Temine, and Stéphane de Navacelle answer Antoine Garapon, General Secretary of Institut des Hautes Etudes sur la Justice, on national French radio France Culture.

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21 April 2021

American Bar Association : Recent developments on corporate criminal liability in France and EU legal cooperation in cross border investigation

Stéphane de Navacelle and Julie Zorrilla spoke on successor company corporate criminal liability, Plea Bargaining and DPAs in France as well as EU legal cooperation in cross border investigation for the American Bar Association International Criminal Law and Anti-corruption committees.

Read summary
20 April 2021

Who’s Who Legal – Business Crime Defence – Corporates 2021

Stéphane de Navacelle recognized based on independent research with clients and peers carried out by Who’s Who Legal (WWL) and Global Investigations Review (GIR) as a leading lawyer in France in 2021 in Business Crime Defence – Corporates.

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20 April 2021

Artificial intelligence at the service of cross-border investigations

Stéphane de Navacelle answers Arnaud Dumourier, Editor-in-chief Le Monde du Droit, on artificial intelligence in cross-border investigations.

Watch the interview
13 April 2021

Who’s Who Legal – Asset Recovery 2021

Stéphane de Navacelle recognized based on independent research with clients and peers carried out by Who’s Who Legal (WWL) and Global Investigations Review (GIR) as a leading lawyer in France in 2021 in Asset Recovery.

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12 April 2021

Stéphane de Navacelle ranked by Chambers Investigations Europe 2021

Stéphane de Navacelle recognized in the Chambers Investigations Europe 2021 ranking in the category Corporate Compliance & Investigations in France.

Stéphane de Navacelle handles corruption and fraud internal investigations on behalf of French and international corporates. Sources say: “He is incredibly diplomatic and good at navigating complicated clients“.

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31 March 2021

European Compliance and Ethics Community : Whistleblowing protection panel

Stéphane de Navacelle, speaks about whistleblowers protection, its transposition into French law and the impact of the dedicated Directive on French companies, for the European Compliance and Ethics Community.

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23 March 2021

Cross-border investigations : French legaltech gains ground

Navacelle choice for Theolex, AI technology that permits to study large volumes of documents for cross-border compliance, regulatory investigations and disputes practices, analized by Pascale D’Amore in Décideurs Magazine.

Read the article.
15 March 2021

Press release – Leading White Collar Firm Navacelle Becomes First French Law Firm to Adopt Theolex

Press release
Leading White Collar Firm Navacelle Becomes First French Law Firm to Adopt Theolex

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PARIS. Theolex, a French legaltech startup that uses artificial intelligence (“AI”) to develop legal analytics for cross-border investigations, announced today that leading French white-collar boutique Navacelle has signed up to be its client, becoming the first French firm to do so.

Theolex, which was initially an innovation project at Société Générale (“SG”) in Paris, signed its first contract with SG in February 2020, and with global law firm Mayer Brown LLP in October 2020. Martine Dolladille, the founder of Theolex stated: “We are thrilled to have Navacelle become the newest client of Theolex. Since its inception in 2010, Navacelle has become one of the leading white collar and compliance practices in France, and we look forward to working with Navacelle lawyers in developing this evolving technology even further.”

Stéphane de Navacelle, Founding Partner stated: “We are thrilled to work with Theolex to help deliver data-driven analytics in our client advocacy, especially in the cross-border investigations space. We are especially pleased to be working with a legaltech that was developed in France, and uses tomorrow’s technology to help us offer innovative legal services to our clients globally.” Stéphane de Navacelle is one of the leading experts in France in internal investigations, has authored the Paris Bar report on ethical guidelines for lawyers carrying out internal investigations, as well as co-authored the French chapter in The Practitioner’s annual Guide to Global Investigations, published by the Global Investigations Review (GIR) since 2016.

Joydeep Sengupta, an advisor of Theolex, stated: “Theolex has been developed organically from the lived experience of cross-border investigations faced by global financial institutions in France, so I am very pleased to see it being adopted by Navacelle, whose founder is a thought-leader in France in the field of internal investigations.”

An Artificial Intelligence-Driven Legal Analytics Tool

Theolex is a transformative legal technology under development that allows legal, compliance, and risk professionals to analyze large volumes of documents using AI. This innovative technology can be applied to both national and cross-border compliance, regulatory investigations and disputes practices. It can be tailored to law firms, financial institutions, corporations, courts and the media.

Theolex provides a significant efficiency gain and cost saving to lawyers and their clients in the context of cross-border investigations, litigation and compliance. It centralizes publicly available negotiated settlements, such as deferred prosecution agreements, regulatory decisions and compliance guidelines. It performs benchmarks and cross-border comparisons to develop legal strategy, and enhances the analysis by correlating multiple data points to support legal arguments and identify future enforcement risks. It can be a powerful tool in providing strategic guidance to boards of directors, general counsels and external counsel.

Importance of Artificial Intelligence and Legal Risk Analytics

AI is transforming the practice of law, by developing data driven insights into legal and compliance risk. Law firms specialized in the field of compliance and investigations are betting on this development.

Impact on Multi-billion Dollar Financial Crime Compliance and Legal Risk Industry

The Financial Crime Compliance industry is worth USD 137 billion in Europe alone, and USD 181 billion globally1. In cross-border compliance investigations for financial institutions, penalties can often be in the hundreds of millions or even billions of dollars. Having quick access to synthesized and analyzed comparisons of the entirety of comparable provisions in similar negotiated agreements makes the lawyer’s arguments more coherent and persuasive, and can tilt the scale in the final negotiated amounts and conditions. The current Covid-19 crisis has made cost and efficiency advantages of technological innovation all the more important.

Contact: Martine Dolladille, Founder
Phone:+33 6 17 15 25 73
email: martine.dolladille@theolex.com

Women’s White Collar Defense Association (WWCDA)

Julie Zorilla joins the Women’s White Collar Defense Association.
WWCDA promotes since 1999, the common interests of women attorneys who specialize in the representation of corporations, other organizations and individuals facing government enforcement actions (criminal, civil, regulatory, and administrative), and in internal investigations, compliance and ethics matters.

11 March 2021

Press release – Navacelle uses artificial intelligence to optimize legal analytics in cross-border investigations

Navacelle adopts Theolex, a French legaltech startup that uses artificial intelligence (“AI”). Their solution is a transformative legal technology that allows to analyze large volumes of documents and thus provides a significant efficiency gain and cost saving to the team and our clients in the context of cross-border investigations, litigation and compliance.

Read the press release
10 March 2021

Navacelle co-authors the 5th edition of the Practitioner’s Guide to Global Investigations

Stéphane de Navacelle, Julie Zorilla, Clémentine Duverne and Sarah Reilly, co-author the French chapter of the fifth edition of Global Investigations Review’s Practitioner’s Guide to Global Investigations.

Read the guide
8 March 2021

The Practitioner’s Guide to Global Investigations – The Practitioner’s Guide to Global Investigations (France)

The Practitioner’s Guide to Global Investigations (France)

Stéphane de Navacelle, Julie Zorilla, Clémentine Duverne and Sarah Reilly.

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General context, key principles and hot topics

1 Identify the highest-profile corporate investigation under way in your country, describing and commenting on its most noteworthy aspects.

The French judiciary’s battle against corruption and financial crime has continued in 2020.

Since the law of 9 December 2016 addressing transparency, anti-corruption and economic modernisation (known as the Sapin II Law) entered into force, 11 judicial public interest agreements (CJIP) have been agreed to by corporations. In the past year, five CJIPs have been signed, two of which stand out.

On 29 January 2020, Airbus SE (Airbus) agreed to a CJIP with the French National Financial Prosecutor (PNF). The CJIP put an end to a joint investigation being carried out by the PNF and the UK Serious Fraud Office (SFO) into bribery of foreign public officials, misuse of corporate assets, breach of trust, conspiracy to defraud, money laundering of the proceeds of these offences, forgery and use of forged documents. The US Department of Justice (DOJ) opened a parallel investigation into violations of the Foreign Corrupt Practices Act (FCPA) and International Traffic in Arms Regulations, for which the PNF shared part of its evidence from its investigation. Airbus agreed to targeted compliance verifications being carried out for a period of three years and to pay a public interest fine of almost €2.1 billion to the French Treasury, reflecting the disgorgement of profits derived from the offences and considering certain aggravating and mitigating factors. This CJIP exists alongside two other deferred prosecution agreements concluded with the SFO and the DOJ. The above-mentioned fine is part of a larger package of €3.6 billion shared with these authorities.Legal professionals consider this CJIP as a step forward for negotiated justice, namely on account of the unprecedented scope of the investigation – three and a half years of investigations covering Airbus’s conduct in more than 20 countries. Airbus’s ‘exemplary level of co-operation’ with the French and UK joint investigation team was praised by the PNF, as the corporation conducted a thorough internal investigation and implemented corrective compliance measures, justifying a 50 per cent reduction of the theoretical maximum of the fine. This CJIP also illustrates the willingness of investigating and prosecuting authorities toco-operate beyond national borders. The French authorities came out as major players in this multi-jurisdictional investigation – the PNF coordinating the investigation with its counterparts and France’s Anti-Corruption Agency (AFA) being trusted by the foreign authorities as the sole auditor of Airbus’s compliance programme and future conduct.

On 4 May 2020, the Swiss company Swiru Holding AG agreed to a CJIP offered by the public prosecutor of Nice. Swiru Holding acknowledged its guilt – a precondition to the signing of the CJIP within the framework of an investigation led by an investigative judge – and agreed to pay a €1.4 million fine for complicity in tax fraud, in addition to the payment of €10.4 million to the tax authorities. Swiru Holding had been indicted in November 2019 by the investigative judge after the investigation had revealed that a large part of the price of a villa acquired by the company had been concealed by the seller. The public prosecutor of Nice is the fourth authority that has signed a CJIP, joining the PNF and the public prosecutors of Paris and Nanterre, thereby showing a wider use of this transactional tool in France.

Alongside the signing of CJIPs, the investigative and judicial authorities in France continue to investigate corporations for offences, such as the investigation and charges of money laundering and financing of terrorism brought against global manufacturer LafargeHolcim.

The AFA, which can be called on to monitor sanctioned companies by CJIP, continues to initiate its own controls – a form of preventive corporate investigation, as the uncovering of any potential offences must be reported to the public prosecutor – and to sanction corporations via its Sanctioning Committee, having issued two decisions during the past year.

Future corporate investigations and settlements could be based on a wider array of offences, such as human rights violations and serious environmental damage, as the scope of the CJIP is likely to be extended in the near future.

2 Outline the legal framework for corporate liability in your country.

Corporations can be held liable on both civil and criminal grounds.

Corporate civil liability is incurred via contract or outside the framework of a contract (a tort). Corporations can be held criminally liable for offences committed on their behalf by their organs or representatives (i.e., individuals who have executive, administrative, managerial or control functions or those who act pursuant to a valid delegation of power). Corporate criminal liability does not exclude liability of the individual having committed the offence or an accomplice to the offence, since the highest French judicial court (Court of Cassation) gives weight to management endorsement of corporate misconduct. Although corporate criminal liability can also be found independently of individual liability, the Criminal Division of the Court has nevertheless reasserted that corporate criminal liability requires the identification of an organ or a representative.

Which law enforcement authorities regulate corporations? How is jurisdiction between the authorities allocated? Do the authorities have policies or protocols relating to the prosecution of corporations?

Corporations are regulated by judicial authorities – with investigative and prosecutorial functions – but also administrative and regulatory authorities. For the most part, jurisdiction between the authorities is dependent on subject matter, with numerous opportunities for co-operation and competition.

Jurisdiction of the judicial courts is usually defined by the location of the offence or the location of the corporate headquarters.

Moreover, specialised interregional courts have jurisdiction over complex economic and financial matters, or multi-jurisdictional matters.<.p>

Furthermore, specialist sections of the prosecution authorities in Paris have national jurisdiction to handle specific offences (e.g., financial crime and corruption, terrorism and crimes against humanity). One example is the PNF, which investigates and prosecutes financial crimes (such as public and private corruption, favouritism, aggravated tax fraud, VAT fraud, insider trading, index fund manipulation). The importance of the PNF was reiterated on 2 June 2020 in a Criminal Policy Circular on the Fight against International Corruption issued by the Minister for Justice. This Circular, addressed to all French prosecutors, sets out the central role of the PNF in the fight against international corruption, given its technical expertise, its visibility and international recognition, and asserts that the PNF must centralise all cases of international corruption and be systematically informed of any credible suspicion of international corruption.

Administrative and regulatory authorities also oversee the activities of corporations. The French Financial Markets Authority (AMF) regulates the integrity of financial markets, ensuring investor protection and information, and preventing market abuse. The French Competition Authority combats antitrust practices and ensures the lawful functioning of the markets by conducting field enquiries, overseeing corporate mergers, and publishing opinions and recommendations. France’s Supervisory and Resolution Authority (ACPR) preserves the stability of the financial system, working with international bodies that supervise insurance and banking industry corporations’ operating conditions and compliance with rules designed to protect customers. The French AFA controls and sanctions corporations covered by Article 17 of the Sapin II Law (i.e., corporations with more than 500 employees, or a group with headquarters in France with more than 500 employees and a turnover that exceeds €100 million) for flawed or insufficient anti-corruption processes and policies, and monitors the implementation of anti-corruption programmes.

The activities of some law enforcement authorities overlap, calling for coordination. The PNF and the AFA published Joint Guidelines on the Implementation of the CJIP in 2019,highlighting their common understanding of their relations with stakeholders in pursuit of a common goal of fighting corruption.

4 What grounds must the authorities have to initiate an investigation? Is a certain threshold of suspicion necessary to trigger an investigation?

Investigations can be initiated by the public prosecutors, or by civil parties via the filing of a formal complaint with an investigating judge.

With respect to public prosecutors, investigations are initiated pursuant to complaint, reporting, voluntary disclosure or flagrante delicto. Prosecutorial discretion with respect to the following steps is considerable. The public prosecutor can choose to prosecute, to settle or to drop the charges, to investigate itself or to pass a case to an investigating judge. There is no minimum threshold of suspicion provided by law for prosecutors to initiate investigative acts and the latter cannot be challenged in court.

With respect to investigating judges, investigations are initiated either through the prosecutor or pursuant to a complaint filed by civil parties. Non-governmental organisations that have been in place for a certain number of years can also file a complaint if the facts of the complaint pertain to the objective of the organisation.

Investigating judges will be seized in rem and their investigative acts will be limited to the facts as presented by the public prosecutors. All investigative acts of the investigating judge can be challenged in court.

Investigations can also stem from administrative or regulatory authorities’ detection of suspicious activities within their material jurisdiction (e.g., AMF, AFA, ACPR).

5 How can the lawfulness or scope of a notice or subpoena from an authority be challenged in your country?

Orders issued by investigating, administrative and judicial authorities must comply with specific formalities and be based on a legal provision.

Notice to attend or a subpoena (i.e., a written notice that requires a party to attend a court hearing or to produce a document to the authorities) can be challenged under French law if the orders are not provided for by law or do not contain the appropriate information to inform the recipients of their rights.

Moreover, the principle of secrecy (e.g., professional secrecy, bank secrecy, defence and security), for instance, is a ground to object to the issuance of an order for the communication of documents – even though recent case law trend has admitted the seizure of documents protected by attorney–client privilege.

In practice, it is rare for legal or administrative orders to be quashed. In criminal law for instance, the quashing of summons to appear will hinge on demonstrating a prejudice to the person concerned by the order – which is difficult to demonstrate in that suspects will often be notified of their rights at some stage in the proceedings.

When a notice or a subpoena is issued by a foreign authority, it is possible to challenge whether it is lawful by opposing the French Blocking Statute (Law 68-678 of 26 July 1968).

The French Blocking Statute prohibits any request for or submission of information or documents of an economic, commercial, industrial, financial or technical nature, whether in writing or orally, either affecting the essential economic interests of France or in view of the information or documents constituting evidence in foreign judicial or administrative proceedings outside the framework of international treaties or agreements.

6 Does your country make use of co-operative agreements giving immunity or leniency to individuals who assist or co-operate with authorities?

There are no formalised co-operative agreements signed with corporations that grant immunity or leniency for individuals who assist or co-operate with authorities.

Nevertheless, the co-operation of individuals with authorities could lead to more lenient sentences. Plea bargaining for individuals is only permitted should they admit guilt; in return, they will receive half of an applicable sentence. Moreover, for offences relating to private and public corruption, a prison sentence can be halved should an involved individual co-operate with the administrative or judicial authorities and contribute to putting an end to the offence or identifying the offenders or accomplices. The Criminal Policy Circular on the Fight against International Corruption issued by the Minister for Justice on 2 June 2020 reasserts this principle.

7 What are the top priorities for your country’s law enforcement authorities?

For several years, in the field of financial crime, the main priority for French enforcement authorities has been the fight against corruption.

This priority was reaffirmed by the Criminal Policy Circular issued by the Minister for Justice on 2 June 2020, which focuses on the fight against international corruption and was adopted in the wider context of the Organisation for Economic Co-operation and Development’s assessment of the anti-corruption arsenal in France.

8 To what extent do law enforcement authorities in your jurisdiction place importance on a corporation having an effective compliance programme? What guidance exists (in the form of official guidance, speeches or case law) on what makes an effective compliance programme?

Within the context of a trial for probity offences, corporations meeting the requirements of Sapin II Law, under Article 17, can request the public prosecutor to offer a CJIP and to impose a lower financial sanction. Nevertheless, this remains at the public prosecutor’s discretion. The public prosecutor considers the ability and willingness of the executive management, once it is aware of the offences that have been committed within the corporation, to implement the necessary corrective measures to enhance the compliance programme. Implementing an effective corporate compliance programme may be a condition of a CJIP and the law enforcement authorities can order the AFA to monitor the compliance programme of a corporation for up to three years.

In practice, should a company enhance its compliance programme in accordance with best practice before a CJIP is signed, the public prosecutor may rule on completion of the structure of the programme, and the AFA will only have to monitor its implementation. In the case of the Airbus CJIP, the AFA had already submitted a preliminary examination report to the PNF.

The first official guidance on the content of an effective compliance programme was provided by the eight pillars of the Sapin II Law, namely code of conduct, whistleblower channel, risk mapping, due diligence on customers, suppliers and third-party agents, internal and external accounting controls, training for high-risk employees, disciplinary sanctions and monitoring and evaluation of measures. Moreover, the AFA has issued several sets of guidelines – including Practical Guide on the Corporate Anti-Corruption Compliance Function and Practical Guide on Implementation of the Compliance Programme Sanction – and practical Q&As for private and public sector entities.

Although AFA recommendations are not legally binding, compliance with them is taken into consideration in the event of subsequent control measures.

Does your country regulate cybersecurity? Describe the approach of local law enforcement authorities to cybersecurity-related failings.

9 Does your country regulate cybersecurity? Describe the approach of local law enforcement authorities to cybersecurity-related failings.

A comprehensive framework addresses cybersecurity at different national levels.

At national level, the National Cybersecurity Agency (ANSSI), established in 2009, is the national authority in charge of cyber-defence and information security. Its purpose is to oversee the activities of government departments, public services, strategic businesses and operators, with the aim of providing a proactive response to cybersecurity matters. It also issues authorisations for exports and imports of goods containing encryption. Alongside ANSSI, other specialist bodies address cybersecurity: the police force (Central Cybercrime Prevention Office) is responsible for fighting crimes linked to information and communication technologies, the National Gendarmerie office is responsible for fighting digital crimes and the Paris Prefecture brigade is responsible for the investigation of information technology fraud.

Should an undertaking’s cybersecurity measures fall short of ensuring data protection, for instance, administrative fines can be incurred.

Moreover, France was the first to require private and public undertakings that operate or use facilities deemed essential for the state’s survival to create information systems and set up effective and mandatory cybersecurity systems. ANSSI, its certified service providers or state services carry out security controls within these undertakings. In the event of non-compliance with any rule, the undertaking will be given notice to comply, or risk a financial sanction pursuant to the Defence Code, which provides for a €150,000 fine for individuals and a €750,000 fine for legal entities.

10 Does your country regulate cybercrime? What is the approach of law enforcement authorities in your country to cybercrime?

The implementation of cybercrime regulations is coordinated by the Interior Ministry in collaboration with ANSSI and dedicated police services. The legal framework for tackling cybercrime has grown in recent years, drawing from the Budapest Convention on Cybercrime of 23 November 2001, which harmonises national laws across Europe, improves investigative techniques and increases co-operation between European states.

Several pieces of French legislation include sanctions for offences constituting cybercrime.

The Criminal Code sanctions hacking and denial-of-service attacks and the Code of Intellectual Property sanctions phishing and possession or use of hardware to commit cybercrime – offenders face imprisonment and fines up to €375,000.

French law provides for extraterritorial application of its provisions in that a cybercrime is considered to have been committed in France if the offence is committed through an e-communication network to the detriment of a person in France or a company with its registered office in France.

Cross-border issues and foreign authorities

11 Does local criminal law have general extraterritorial effect? To the extent that extraterritorial effect is limited to specific offences, give details.

Criminal law can have extraterritorial effect should a crime or misdemeanour be committed abroad by a French national. For misdemeanours (délits) committed abroad, extraterritoriality will apply, provided that the conduct is sanctionable under the legislation of the country in which it was committed (double incrimination). In respect of corruption, whether in a public or private context, the Sapin II Law removes the double incrimination requirement and extends the extraterritoriality effect to French residents or those individuals and corporations that conduct their economic activity on French soil.

Criminal law can also have extraterritorial effect should a crime or misdemeanour that is sanctioned by imprisonment be committed abroad against a French national.

The public prosecutor can only initiate proceedings against an offender once a formal complaint has been filed by a victim or by the concerned foreign authorities.

In specific circumstances, French criminal law can have extraterritorial effect should a crime or misdemeanour be committed abroad by a non-French national, in the event that his or her extradition or transfer to his or her country of origin be refused by the French authorities.

French criminal law can also have extraterritorial effect in other limited circumstances, such as when the fundamental interests of the nation, diplomatic or consular agents or premises are targeted and when crimes and misdemeanours pertaining to acts of terrorism are committed abroad by a French national or a resident on French soil.

12 Describe the principal challenges that arise in your country in cross-border investigations, and explain whether and how such challenges depend on the other countries involved.

The challenges of cross-border investigations mainly occur when the French authorities are not involved in the investigation and prosecution proceedings.

The United States has always encouraged a more hard-line enforcement of international financial and corruption issues globally, whereas the French authorities tend to co-operate with the United States without tackling the issues proactively and independently. The Sapin II Law marks the change in cross-border investigations, in which the French authorities, are much more involved and trusted as international participants. The Airbus CJIP is an illustration of this new status. The PNF coordinated the investigations with the UK’s SFO and US DOJ and was the main point of contact for Airbus.

Even though the French authorities are currently more involved in cross-border investigations, some issues remain. One of the main challenges is to ensure that French corporations and individuals abide by the French Blocking Statute. This statute prohibits the communication of economic, commercial, industrial, financial or technical documents or information to foreign authorities or the use of any such information as evidence in legal proceedings abroad, subject to mechanisms afforded under international agreements or treaties, such as the Convention on the Taking of Evidence Abroad in Civil or Commercial Matters (the Hague Evidence Convention) or a mutual legal assistance treaty.

To mitigate this challenge when the French authorities are not involved in a request for communication from foreign authorities, French corporations or individuals can seek advice from the AFA or the Strategic Information and Economic Security Service (SISSE) of theMinistry for Economy and Finance.

Another challenge in investigations that cross the borders of the European Union is the protection of personal data. The EU General Data Protection Regulation (GDPR) came into force in France on 20 June 2018 and introduced new rules on communication of personal data to foreign authorities. Article 48 of the GDPR provides that any transfer of personal datamust be based on an international agreement.

13 Does double jeopardy, or a similar concept, apply to prevent a corporation from facing criminal exposure in your country after it resolves charges on the same core set of facts in another? Is there anything analogous in your jurisdiction to the ‘anti-piling on’ policy as exists in the United States (the Policy on Coordination of Corporate Resolution Penalties) to prevent multiple authorities seeking to penalise companies for the same conduct?

The principle of double jeopardy enshrined in Article 14.7 of the International Covenant on Civil and Political Rights, Article 50 of the Charter of Fundamental Rights of the European Union and Article 4 of Protocol No. 7 to the European Convention on Human Rights has been ratified by France. The French state provides an exception in its ratification of Article 4 of Protocol No. 7, limiting the application of ne bis in idem to the field of criminal law. Based on this principle, no individual who has been convicted or acquitted in France by definitive criminal judgment may be prosecuted again for the same offence.

French criminal case law considers, however, that ne bis in idem does not apply when a definitive foreign judgment has been rendered for an offence of which elements occurred in France. For instance, on 14 March 2018, in a decision regarding the Oil-for-Food Programme, the Court of Cassation (the highest criminal court in France) confirmed that Article 14.7 of the United Nations (UN) International Covenant on Civil and Political Rights applies only when both proceedings are initiated in the territory of the same state. Thus, the double jeopardy provision found in a US deferred prosecution agreement (DPA) does not apply.

Owing to the French exception in its interpretation of Article 4 of Protocol No. 7, it is possible in France for an individual or corporation to be sanctioned for the same offence by both judicial and administrative authorities. On 6 June 2019, however, in a case involving two sanctions for market offences – by the AMF and the criminal court – France was convicted by the European Court of Human Rights (ECHR) for violation of the ne bis in idem principle (Nodet v. France, Case No. 47342/14). The ECHR calls on France to ensure that each proceeding is duly considered and that the overall amount of all penalties is proportionate.

14 Are ‘global’ settlements common in your country? What are the practical considerations?

Global settlements are a recent development in France in multi-jurisdictional investigations.

The Société Générale CJIP in 2018 and the Airbus CJIP in 2020, both signed alongside foreign DPAs, demonstrate an intent to reinforce co-operation between cross-border authorities.

The main practical consideration with respect to global settlements is that they can occur in jurisdictions with an entirely different legal system.

15 What bearing do the decisions of foreign authorities have on an investigation of the same matter in your country?

In criminal matters, save for cases in which ne bis in idem applies, the French authorities are free to take a foreign court ruling into consideration to open an investigation. The French authorities conduct their own investigations independently.

In practice, however, the emerging trend is towards co-operation between French and foreign authorities.

Economic sanctions enforcement

16 Describe your country’s sanctions programme and any recent sanctions imposed by your jurisdiction.

The implementation of economic sanctions in France is essentially part of UN sanctions policy and the EU Common Foreign and Security Policy. Restrictive measures, such as asset freezing, embargoes and commercial restrictions, are enforced by a European Council decision supported by EU Regulations and are directly binding on EU Member States. Unilateral measures can also be implemented by national decree or order, even though the European Commission, in a recent non-binding opinion, has considered unilateral asset freeze measures to be incompatible with EU law.

The sanctions may target governments of foreign countries, non-government entities and individuals. France’s Ministry of the Economy and Finance (Directorate-General of the Treasury) and Ministry for Europe and Foreign Affairs oversee the implementation of any sanction decided at European level.

The national sanctions framework relies on three legal codes, namely the Customs Code, the Monetary and Financial Code and the Defence Code.

17 What is your country’s approach to sanctions enforcement? Has there been an increase in sanctions enforcement activity in recent years, for example?

There is no unique approach to sanctions enforcement.

In recent years, measures to fight terrorism financing have increased. For instance, the French Monetary and Financial Code entitles the Minister of Economy and Finance to order the freezing of assets belonging to individuals or legal entities who commit, or attempt to commit, terrorist acts, or who facilitate or participate in such acts. On 17 June 2019, the French Directorate-General of the Treasury published an updated version of the guidelines drafted with the ACPR on the implementation of French economic sanctions.

18 Do the authorities responsible for sanctions compliance and enforcement in your country co-operate with their counterparts in other countries for the purposes of enforcement?

There is no general framework to criminalise the violation of economic sanctions, although a bill for this purpose was considered by the French Parliament in 2016. However, France enforces international and European restrictive measures.

19 Has your country enacted any blocking legislation in relation to the sanctions measures of third countries? Describe how such legislation operates.

As a member of the European Union, France is subject to the EU Blocking Regulation established on 22 November 1996 and updated on 6 June 2018 by the European Commission.

This Regulation is directly enforceable in France. The measure forbids EU citizens from complying with third-country extraterritorial sanctions unless exceptionally authorised to do so by the European Commission, as set forth in Commission Implementing Regulation (EU) 2018/1101.

20 To the extent that your country has enacted any sanctions blocking legislation, how is compliance enforced by local authorities in practice?

Although the Blocking Regulation sanctions EU companies that would comply with third-country sanctions, the measure has much more of a symbolic effect than an economic one.

It has only been applied in 1998 in the context of a complaint filed by the European Communities before the World Trade Organization. As regards the US sanctions on Iran, experts are sceptical about how far Europe will ultimately go to enforce such a rule. It could also prove difficult to enforce, in part because of the international banking system and the significance of the United States in international financial markets.

Before an internal investigation

21 How do allegations of misconduct most often come to light in companies in your country?

Allegations can come to light through various channels.

Article 8 of the Sapin II Law provides for a three-tiered reporting system, by which employees or business partners first must submit an alert to their direct supervisor, employer or designated representative. Second – if no appropriate action is taken or there is a likelihood of imminent danger – the alert must be submitted to the relevant judicial, administrative or professional authority. Third – if no appropriate action is taken or there is a
likelihood of imminent danger – the alert must be made public. Appropriate procedures for collecting reports must be established by legal entities with more than 50 employees, state administrations, municipalities with more than 10,000 inhabitants, public inter-municipal co-operation establishments, departments and regions.

Since the Sapin II Law has been in force, allegations thereby increasingly occur via whistleblowing channels.

Moreover, increasing freedom of the press and protection of journalists’ sources has led the media to reveal facts, resulting in the prosecution of key political figures and corporations in recent years.

Thematic reviews can also be carried out by administrative and regulatory authorities or by statutory auditors that reveal misconduct within corporations.

Information gathering

22 Does your country have a data protection regime?

Yes, France has a data protection regime.

In 1978, France adopted a data protection regime with the Law on Information Technology, Data Files and Civil Liberties.

In 2016, the European Parliament and the Council of the European Union adopted the GDPR, which entered into force on 25 May 2018. The GDPR was incorporated in France’s internal legislative framework by Law No. 2018-493, which was passed on 20 June 2018, amending the existing law, of which some provisions were contrary to the GDPR.

23 To the extent not dealt with above at question 9, how is the data protection regime enforced?

Law No. 2018-493 of 20 January 2018 and the GDPR grant new investigating and sanctioning powers to the National Commission on Computing and Liberty (CNIL).

The right of the individual to information and the right of access, rectification and deletion of personal data are reinforced and the sanctions imposed in the event of obstruction or non-compliance with the legal provisions are increased. The CNIL has the power to impose a periodic sanction (limited to €100,000 per day) in addition to administrative fines (which can be as much as €20 million or 4 per cent of annual global turnover). CNIL agents also have a broader right to survey and investigate places used for the processing of personal data, namely with respect to European coordination.

24 Are there any data protection issues that cause particular concern in internal investigations in your country?

Although there are several data protection issues relevant to internal investigations in France, these are not country-specific, as they result from European regulation (i.e., the GDPR).

The main issue is that lawyers leading internal investigations may find themselves as guarantors of data protection and must reconcile this duty of protection with the duty of professional secrecy. It is necessary to clearly identify the regulations applicable to the use or transfer of data, such as the rules protecting the transfer of data considered to be within the scope of the interests of France (i.e., the Blocking Statute, rules on corporate secrecy), the rules protecting the access, processing and transfer of personal data outside or within the European Union (e.g., transfers based on international conventions), the rules protecting the rights of individuals who are subject to internal investigations (e.g., information provided to individuals regarding their right to access, rectify or delete data) and the rules pertaining to the length of time for which data can be stored.

25 Does your country regulate or otherwise restrict the interception of employees’ communications? What are its features and how is the regime enforced?

When employees use technological devices made available to them by their employer for professional purposes, those devices are presumed to be professional. Employers are therefore permitted to request to consult or access them. The courts, however, have curtailed this right of access based on the right to privacy. Professional emails, text messages or chat applications expressly labelled as private are thereby confidential and not accessible by the employer.

Dawn raids and search warrants

26 Are search warrants or dawn raids on companies a feature of law enforcement in your country? Describe any legal limitations on authorities executing search warrants or dawn raids, and what redress a company has if those limits are exceeded.

Yes, search warrants and dawn raids are a key element of enforcement and evidence gathering by judicial and administrative authorities.

Strict legal provisions apply to search warrants and dawn raids. The latter must be authorised either by the public prosecutor for in flagrante delicto and preliminary investigations or the investigating judge for judicial investigations. In preliminary investigations, the consent of the individuals or corporations to be raided is needed. Should consent not be given, the dawn raid must be authorised by the Judge of Liberties and Custody. Moreover, dawn raids can only be conducted between 6am and 9pm, except in cases of organised crime and terrorism. Minutes of the dawn raid are drafted and signed by the entities or individuals involved in the raid.

Companies subject to dawn raids should ensure that these legal provisions are followed.

Any incident should be recorded in the minutes of the dawn raid and the minutes should not be signed if there is any disagreement regarding the content.

If the legal requirements of a dawn raid have been violated, the nullity of the dawn raid and the ensuing procedural acts, including the seizure of materials, can be requested. The company will be able to request the return of seized materials.

27 How can privileged material be lawfully protected from seizure during a dawn raid or in response to a search warrant in your country?

Privilege only attaches to external lawyer material and not that of in-house counsel.

Privileged material is protected from investigating and judicial scrutiny, save for materials unrelated to defence rights or those establishing the participation of the lawyer in an offence.

Corporations or individuals must thereby indicate the material that is covered by lawyer–client privilege. In the case of seizure of privileged material, the corporations or individuals involved must seek permission to make copies and file a subsequent request to have the privileged material returned.

28 Under what circumstances may an individual’s testimony be compelled in your country? What consequences flow from such compelled testimony? Are there any privileges that would prevent an individual or company from providing testimony?

There are two separate regimes for witnesses and suspects.

During the investigation phase, police officers can summon as a witness any person who they deem fit for the purposes of the investigation. Should a witness refuse to comply, a police officer may notify the public prosecutor, who may compel the person by official notice.

Witnesses who fail to appear or testify before the investigating judge or police officer without proper reason face a €3,750 fine. Before a court, witnesses are always compelled to attend the hearing and testify. The summons issued to a witness must also state that failure to appear, refusal to testify and perjury are punishable by law. Witnesses who refuse to appear without proper reason face a €10,000 fine.

Police officers can detain suspects for the amount of time necessary for the purposes of the investigation and under the limitations of the law and approval of a judge. A suspect can refuse to answer questions based on the right against self-incrimination.

Testimony can also be refused on account of public service (e.g., diplomatic, presidential or parliamentary immunity) or professional secrecy. Testimony revealing information of a secret nature by a person who is in possession of that information, owing to state, professional or temporary function or mission, is sanctioned by imprisonment or a €15,000 fine, save for limited exceptions.

Whistleblowing and employee rights

29 Describe the whistleblowing framework in your country. What financial incentive schemes exist for whistleblowers? What legal protections are in place for whistleblowers?

Until the implementation of the European Directive, which grants broader protection to whistleblowers (e.g., access to free information and advice about the available procedures for protection against any legal action taken against them), the Sapin II Law provides relevant protective measures.

There are no financial incentives for whistleblowers in France. The idea of a financial incentive scheme was considered but the French Constitutional Council ruled against it.

With respect to legal protections, whistleblowers cannot be excluded from recruitment procedures or professional training, cannot be dismissed, or face direct or indirect discriminatory measures. The protection of whistleblowers’ identity must also be guaranteed.

30 What rights does local employment law confer on employees whose conduct is within the scope of an investigation? Is there any distinction between officers and directors of the company for these purposes?

Internal investigations do not benefit from a dedicated legal framework. In September 2016, the Paris Bar adopted a vade mecum of ethical recommendations for investigating lawyers, which was amended in December 2019. On 12 June 2020, the National Council of Bars also published a guide for French lawyers conducting internal investigations. Other legal provisions apply to these internal investigations.

Employees whose conduct is within the scope of an investigation could benefit from several rights, but these are not expressly provided by law. Employees interviewed within an internal investigation should be informed that the external lawyer represents the company and not their personal interests and that they can be assisted by an independent lawyer, should their conduct amount to misconduct. The purpose of the interview and its non-coercive
nature should also be indicated.

Furthermore, data protection and privacy laws apply to all employees regardless of allegations of wrongdoing, allowing employees to access and modify all personal data that has been collected and entitling them to invoke the right to privacy. This right to privacy may be circumvented, however, should emails, text messages or chat applications be located on professional devices, and they are not marked as private or in a private inbox.

There is no different treatment applicable to officers and directors of companies within internal investigations.

31 Do employees’ rights under local employment law differ if a person is deemed to have engaged in misconduct? Are there disciplinary or other steps that a company must take when an employee is implicated or suspected of misconduct, such as suspension or in relation to compensation?

Presumption of innocence applies to all employees, including those who are deemed to have engaged in misconduct. These employees thereby benefit from the same rights as other employees (e.g., notice for interview and notification of rights). Employees suspected of misconduct must be advised of their right to a lawyer.

If misconduct is confirmed, an employer has several options for sanctioning employees, including dismissing them or putting them on furlough during the investigation.

32 Can an employee be dismissed for refusing to participate in an internal investigation?

The labour courts appear to consider the refusal to participate in an internal investigation as a sufficiently severe fault to warrant sanction under specific circumstances.

Commencing an internal investigation

33 Is it common practice in your country to prepare a document setting out terms of reference or investigatory scope before commencing an internal investigation? What issues would it cover?

When judicial review by a labour court is likely to happen (e.g., if an employee who has been sanctioned for misconduct challenges the findings of an internal investigation), it is considered best practice to prepare a document setting out the terms of reference or investigatory scope before commencing an internal investigation.

34 If an issue comes to light prior to the authorities in your country becoming aware or engaged, what internal steps should a company take? Are there internal steps that a company is legally or ethically required to take?

French law does not provide a clear set of rules with respect to the internal steps a company should take when it becomes aware of an issue with legal implications. The company should assess the scope of the facts and the probability of incurring liability, to determine the interest in co-operating with the authorities and to set out a defence strategy.

There is no obligation to report back to authorities, but it is encouraged within the framework of a CJIP. The joint AFA-PNF Guidelines on the implementation of CJIPs expressly provide, however, that voluntary self-disclosure by a company will be taken into account favourably, both for the opportunity to settle a CJIP and as a mitigating factor.

The main legal requirement is for individuals or corporations not to destroy oramend evidence.

35 What internal steps should a company in your country take if it receives a notice or subpoena from a law enforcement authority seeking the production or preservation of documents or data?

It is very likely that the enforcement authority would collect documents or data directly by carrying out a raid within the company, having gathered sufficient information from third parties to ensure that it is possible to collect relevant information. If a company has any reason to believe a raid is likely, it should immediately ensure that any documents that may be seized indicate privilege, where relevant.

Administrative authorities (e.g., AFA, AMF, ACPR, the Competition Authority) can request communication of data and documents from companies under review or directly from third parties. If these requests are legally permitted, corporations must comply.

36 At what point must a company in your country publicly disclose the existence of an internal investigation or contact from a law enforcement authority?

Other than those attached to publicly traded companies, there are no obligations as to when a company must disclose the existence of an internal investigation or contact from a law enforcement authority.

Self-disclosure is an option available to obtain credit for co-operation.

37 How are internal investigations viewed by local enforcement bodies in your country?

Influenced by the Anglo-Saxon legal culture, internal investigations have been progressively accepted by specialist financial investigating judges and prosecutors.

Although negotiating a deal with a prosecutor or an investigating magistrate is still rather uncommon, the number of CJIPs has increased in recent years, and internal investigations are an effective tool in multi-jurisdictional matters and cross-border negotiated justice. French authorities are relying more and more on internal investigations, which are considered a key component of a criminal file.

Influenced by the Anglo-Saxon legal culture, internal investigations have been progressively accepted by specialist financial investigating judges and prosecutors.

Although negotiating a deal with a prosecutor or an investigating magistrate is still rather uncommon, the number of CJIPs has increased in recent years, and internal investigations are an effective tool in multi-jurisdictional matters and cross-border negotiated justice. French authorities are relying more and more on internal investigations, which are considered a key component of a criminal file.

Attorney–client privilege

Can the attorney–client privilege be claimed over any aspects of internal investigations in your country? What steps should a company take in your country to protect the privilege or confidentiality of an internal investigation?

There is no attorney–client privilege for communications with in-house counsel in France.

To benefit from privilege, investigations should be carried out by external lawyers. Lawyers
cannot be freed from the duty of professional secrecy under any circumstances, even by their clients.

Professional secrecy applies between lawyers and their clients but not with the employees of their clients. Lawyers must therefore notify those employees that anything they say can be disclosed to the authorities by their employer.

Confidentiality applies to communications between lawyers and providing separate counsel to individuals is recommended to facilitate safe communications.

The AFA-PNF Guidelines differ slightly from the Paris Bar’s vade mecum for investigating lawyers, published in 2019. Whereas the AFA-PNF Guidelines state that not all the evidence included in an internal investigation report is necessarily covered by lawyers’ professional confidentiality, the vade mecum provides that all documents lawyers draw up in the course of their work are covered by professional secrecy.

In any case, the client is at liberty to disclose documents.

39 Set out the key principles or elements of the attorney–client privilege in your country as it relates to corporations. Who is the holder of the privilege? Are there any differences when the client is an individual?

There is no specific attorney–client privilege relating to corporations.

The particularity within this context is to determine who the counterpart of the lawyer is within a corporation, which will usually be the general manager or general counsel.

There are no differences when the client is an individual.

40 Does the attorney–client privilege apply equally to in-house and external counsel in your country?

There is no privilege attached to communications with in-house counsel. Privilege only attaches to external lawyers.

The Gauvain Report published on 26 June 2019 on the protection of companies against extraterritorial reach recommends introducing privilege applicable to legal advice given by in-house counsel.

41 Does the attorney–client privilege apply equally to advice sought from foreign lawyers in relation to (internal or external) investigations in your country?

There is no general provision regarding attorney–client privilege as regards foreign lawyers in relation to investigations.

The Paris Bar Council has stressed that email exchanges between a client and a foreign lawyer can be covered by attorney–client privilege. In addition, foreign lawyers can be temporarily and occasionally authorised to practise consulting and counselling activities in France.

In that case, they are bound by both their home country’s professional rules and the ethics rules applicable to French lawyers, which include attorney–client privilege.

42 To what extent is waiver of the attorney–client privilege regarded as a co-operative step in your country? Are there any contexts where privilege waiver is mandatory or required?

Attorney–client privilege cannot be waived by lawyers under any circumstances, even when permitted by the client, save for the personal defence of lawyers in a case opposing their client or specific cases provided by law.

The client is not bound by attorney–client privilege.

43 Does the concept of limited waiver of privilege exist as a concept in your jurisdiction? What is its scope?

This concept does not exist in France.

44 If privilege has been waived on a limited basis in another country, can privilege be maintained in your own country?

As attorney–client privilege is general, absolute and unlimited in time under French law, it must be maintained, even after a limited disclosure abroad.

Co-operation between enforcement authorities is likely, however, to make the privilege moot.

45 Do common interest privileges exist as concepts in your country? What are the requirements and scope?

Common interest privileges do not exist per se in French law. It is possible, however, for the purposes of defending a client, to share privileged information with other attorneys without waiving privilege – whether the clients share a common interest or not (foi du palais).

46 Can privilege be claimed over the assistance given by third parties to lawyers?

Professional secrecy can be extended to experts on whom lawyers rely for the purposes of their work.

It is usually safer to have the information collected and processed within the law firm’s offices.

Witness interviews

47 Does your country permit the interviewing of witnesses as part of an internal investigation?

There are no legal provisions regarding internal investigations, including the interviewing of witnesses.

Interviews with individuals who are not current or former employees of the company are not prohibited by the Paris Bar vade mecum, but recourse to external counsel is advised.

48 Can a company claim the attorney–client privilege over internal witness interviews or attorney reports?

See question 38. Yes, a company can claim attorney–client privilege over internal witness interviews or attorney reports. Nevertheless, the AFA-PNF Guidelines differ slightly from the Paris Bar vade mecum for investigating lawyers regarding the documents covered by attorney–client privilege.

49 When conducting a witness interview of an employee in your country, what legal or ethical requirements or guidance must be adhered to? Are there different requirements when interviewing third parties?

There are no legal provisions regarding internal investigations, including the interviewing of witnesses.

The Paris Bar vade mecum makes no distinction between interviews carried out with employees and third parties.

50 How is an internal interview typically conducted in your country? Are documents put to the witness? May or must employees in your country have their own legal representation at the interview?

Lawyers conducting interviews must explain to whom the attorney–client relationship applies (i.e., that they are acting in the interests of the corporation, not the employees) and that independent representation is possible. Lawyers must also indicate the purpose of the interview and its non-coercive nature.

Documents can be provided ahead of time. This practice usually occurs when an employee has separate representation. Documents are communicated from the lawyer of the company to the lawyer of the employee, as correspondence between attorneys is covered by default by privilege. This ensures that the employee is not given the opportunity to communicate the documents to third parties and that the authorities are unable to seize the documents.

Reporting to the authorities

51 Are there circumstances under which reporting misconduct to law enforcement authorities is mandatory in your country?

Except for specific crimes that are inchoate and can be avoided, only civil servants have a general obligation to report crimes of which they become aware in the context of their employment.

There is no legal requirement to self-report.

The guidelines on CJIPs clearly state, however, that voluntary self-reporting of offences to prosecutors, if made in a timely manner – both as regards the choice of the CJIP procedure and as a factor reducing the amount of the public interest fine – will be considered favourably.

52 In what circumstances might you advise a company to self-report to law enforcement even if it has no legal obligation to do so? In what circumstances would that advice to self-report extend to countries beyond your country?

Self-reporting is not very common in France.

A corporation will be advised to self-report if misconduct is established without doubt, if proper corrective measures have been taken and if the corporate compliance programme has been reinforced, to be given credit for co-operation with the judicial authorities notified of the misconduct. The involvement of foreign authorities can also have a bearing on a decision to self-report, as well as the multi-jurisdictional aspect of investigations, should the multiple authorities involved be likely to collaborate.

In criminal matters, a corporation could be advised to self-report to authorities in a foreign country, should the foreign legislation be favourable to corporations that come forward.

53 What are the practical steps you need to take to self-report to law enforcement in your country?

There is no specific procedure for self-reporting and no legal requirement to do so.

Informal contacts should be made, through external counsel, with the competent authority, after a thorough analysis of the advantages and disadvantages. Although there is no statutory requirement to evaluate self-reporting and co-operation in a CJIP, the AFA-PNF Guidelines indicate that self-reporting within a reasonable period shall be onsidered favourably, as a factor for encouraging the offer of a CJIP or reducing the fine.

Responding to the authorities

54 In practice, how does a company in your country respond to a notice or subpoena from a law enforcement authority? Is it possible to enter into dialogue with the authorities to address their concerns before or even after charges are brought? How?

Corporations must respond in writing to notices or subpoenas from a law enforcement authority in compliance with the methods and time limits provided by law.

It is possible to enter into dialogue with the investigating authorities, whether the investigating judge or the public prosecutor, but these communications often remain unofficial and may not amount to anything. Alongside ad hoc communications, investigative acts beyond the scope of the mandate of the judicial authority can be challenged in court.

55 Are ongoing authority investigations subject to challenge before the courts?

Yes, ongoing authority investigations can be challenged before the courts.

Ongoing investigations led by a public prosecutor are not subject to challenge before the courts, except for a limited number of investigating acts that breach legal requirements.

Challenges are only possible once the investigation is closed by requesting the nullity of the investigative acts.

However, investigative acts in ongoing investigations led by an investigating magistratecan be challenged before the courts.

56 In the event that authorities in your country and one or more other countries issue separate notices or subpoenas regarding the same facts or allegations, how should the company approach this?

The company should answer to all the authorities involved separately, as the questions that can be raised by different authorities vary.

It should nevertheless be borne in mind that authorities communicate with one another.

When dealing with foreign authorities, the Blocking Statute, specific secrecy provisions, privacy and data protection issues should also be addressed.

57 If a notice or subpoena from the authorities in your country seeks production of material relating to a particular matter that crosses borders, must the company search for, and produce material, in other countries to satisfy the request? What are the difficulties in that regard?

The collection of material abroad will have to be carried out in compliance with the applicable
foreign law.

The difficulty may be that applicable foreign law does not allow the seizure and production of material. If a corporation finds it impossible to provide requested material, it must explain the situation to the French authorities.

58 Does law enforcement in your country routinely share information or investigative materials with law enforcement in other countries? What framework is in place in your country for co-operation with foreign authorities?

Co-operation with foreign enforcement authorities is increasing, both within the European Union and beyond, namely through mutual legal assistance treaties, agreements between regulators and enforcement authorities, and EU co-operation agreements.

59 Do law enforcement authorities in your country have any confidentiality obligations in relation to information received during an investigation or onward disclosure and use of that information by third parties?

Except where the law provides otherwise, inquiry (i.e., under an investigating magistrate) and investigation (i.e., under a public prosecutor) proceedings are confidential. Third parties are not bound by this confidentiality.

Any person contributing to an investigation is bound by this confidentiality, namely the judges in charge of the investigation, the public prosecutor, the law clerks, the bailiffs, the police investigators, the personality investigators and any interpreters or experts.

Lawyers are not bound by this confidentiality but are bound by professional secrecy. The disclosure of confidential information by breaching confidentiality or professional secrecy can be sanctioned by imprisonment for one year and a €15,000 fine.

50 How would you advise a company that has received a request from a law enforcement authority in your country seeking documents from another country, where production would violate the laws of that other country?

The corporation should retain external counsel to obtain a legal opinion on the law of the country in which the documents sought are located. Co-operation with the French and foreign authorities – and perhaps with the diplomatic authorities of both countries pursuant to formal co-operation agreements – may be necessary for the production to be carried out appropriately.

61 Does your country have secrecy or blocking statutes? What related issues arise from compliance with a notice or subpoena?

Yes, France has both a country-specific blocking statute and privacy statutes.

The French Blocking Statute prohibits the communication of economic, commercial, industrial, financial or technical documents or information to foreign authorities or their use as evidence in judicial or administrative proceedings abroad, subject to mechanisms afforded under international agreements or treaties, such as the Hague Evidence Convention or a mutual legal assistance treaty. Data protection legislation, in that it can prohibit the transfer of data outside Europe, could also constitute a type of blocking statute.

Several secrecy laws exist, depending on the interests at play (e.g., banking, security and defence, medical, journalism source or corporate secrecy). To ensure the preservation of these secrecy provisions, communications should be properly addressed when responding to a foreign authority.

Bank secrecy, for instance, should be addressed when a notice or subpoena concerns a financial institution. These institutions owe a legal duty to their customers not to disclose information about their affairs to third parties. Any banking institution that discloses information about customers faces criminal sanction pursuant to the Monetary and Financial Code and the Criminal Code.

62 What are the risks in voluntary production versus compelled production of material to authorities in your country? Is this material discoverable by third parties? Is there any confidentiality attached to productions to law enforcement in your country?

Voluntary production is limited to very specific circumstances, namely when foreign authorities are involved or there is a strategic interest in doing so in an ongoing investigation.

All material produced is included in the criminal file and is accessible, under limited circumstances, to defendants (indicted and assisted witnesses) and civil parties. Although legal professionals are bound by professional secrecy, they are not bound by the confidentiality of the inquiry. They are free to share information – not documents – from the file with their clients, who can then share the information with third parties.

Prosecution and penalties

63 What types of penalties may companies or their directors, officers or employees face for misconduct in your country?

Corporations sanctioned for misconduct can face fines, payment of civil compensation to victims, disgorgement of profits resulting from the offence, dissolution, publication of the sanction in the press and debarment from bidding for tender for certain specific offences.

Individuals sanctioned for misconduct can face fines, imprisonment, payment of civil compensation to victims or a ban on undertaking specific managerial positions. Directors, officers or employees also face sanctions from their company, including dismissal.

Hearings are rarely closed. Therefore, corporations and individuals face the risk of having their identity disclosed in the press.

64 Where there is a risk of a corporate’s suspension, debarment or other restrictions on continuing business in your country, what options or restrictions apply to a corporate wanting to settle in another country?

The EU Directive on public procurement has been transposed into French law, prohibiting companies found guilty of specific offences (e.g., corruption, fraud, money laundering, terrorism or embezzlement and misappropriation of property) from bidding in public procurements throughout the European Union for five years – unless the sentencing decision specifically provides for a more limited period.

French law provides that corporations cannot bid for public procurements if they have previously been sanctioned definitively by a court of law for certain offences, namely corruption, extortion or probity offences.

65 What do the authorities in your country take into account when fixing penalties?

The principle of personalisation of a sanction applies in France to corporations and individuals.

Regarding the CJIP public interest fine, the AFA-PNF Guidelines specify that the fine should reflect the illegal profits derived by the corporation from the offence but can also have a punitive dimension. With respect to the punitive aspect, the Guidelines consider the corruption of a public official, the fact that the legal entity falls within the scope of the compliance obligation of the Sapin II Law, the existence of possible convictions or sanctions for similar offences, any attempt to conceal the offence, and the repeated or even systemic nature of corruption. Gains in market share or increased visibility may also be considered when determining the amount of the fine.

Resolution and settlements short of trial

66 Are non-prosecution agreements or deferred prosecution agreements available in your jurisdiction for corporations?

The French legal system does not offer non-prosecution agreements.

The CJIP is available, allowing corporations accused of corruption, probity offences or tax fraud to settle. This will imply a financial fine, without constituting an admission of guilt – thereby allowing corporations to continue bidding for public procurements – except in cases following an inquiry. Discussions are being held regarding extending CJIPs to apply to serious environmental crime.

67 Does your jurisdiction provide for reporting restrictions or anonymity for corporates that have entered into non-prosecution agreements or deferred prosecution agreements until the conclusion of criminal proceedings in relation to connected individuals to ensure fairness in those proceedings?

There is no correlation in French law between a settlement with a corporation and criminal proceedings regarding individuals. There are therefore no reporting restrictions or anonymity for corporates beyond the confidentiality of criminal settlement negotiations.

The AFA-PNF Guidelines provide that the aim of internal investigations conducted by a prosecuted company, and communicated to the prosecutor, is also to determine individual liabilities.

68 Prior to any settlement with a law enforcement authority in your country, what considerations should companies be aware of?

If a case is likely to involve foreign jurisdictions, companies should assess the consequences of admitting guilt in France, namely regarding the principle of ne bis in idem.

Corporations should also be mindful that signing a French plea bargain – as compared with signing a CJIP – amounts to an admission of guilt, thus preventing them from bidding for public tenders.

69 To what extent do law enforcement authorities in your country use external
corporate compliance monitors as an enforcement tool?

Law enforcement authorities cannot use external corporate compliance monitors as an enforcement tool, as the AFA constitutes the official compliance monitor, with a monopoly on the supervision of the compliance programmes of legal entities that have signed a CJIP, in accordance with the Sapin II Law.

In specific cases, the legal entities have recourse to experts (e.g., law, accounting or audit firms) to process the AFA requests.

70 Are parallel private actions allowed? May private plaintiffs gain access to the authorities’ files?

Should alleged victims demonstrate legal standing, they will be allowed to join the criminal procedure as civil parties and, as such, will be granted access to the criminal file and be able to submit requests for investigative acts.

Moreover, alleged victims can initiate a criminal investigation by filing an official complaint to that effect.

Private parties do not normally have access to the investigation files held by administrative authorities.

Publicity and reputational issues

71 Outline the law in your country surrounding publicity of criminal cases at the investigatory stage and once a case is before a court.

Investigations led by a prosecutor or investigating judge are confidential.

As defendants and victims have access to the criminal file but are not bound by secrecy, it is sometimes very difficult to keep communications and information confidential. To prevent leaks of fragmented or inaccurate information or to avoid disrupting public order, the public prosecutor may, either ex officio or at the request of the investigating court or the parties, communicate on objective elements of the proceedings, without making an assessment on the charges.

Members of the press can be present and cover the hearing – albeit microphones and cameras are not allowed in the courtroom. Defendants and victims are free to make statements within the limits of the freedom of expression.

72 What steps do you take to manage corporate communications in your country?
Is it common for companies to use a public relations firm to manage a corporate crisis in your country?

It is common to have press releases, communications and crisis management strategies prepared and, when appropriate, public relations firms assisting. The spokesperson is often a lawyer on the case, especially when individuals are involved.

73 How is publicity managed when there are ongoing related proceedings?

Publicity is part of the overall strategy, namely in high-profile matters that attract political attention and have numerous civil parties.<§^>

Duty to the market

74 Is disclosure to the market in circumstances where a settlement has been agreed but not yet made public mandatory?

There are no circumstances in which a judicial settlement could be agreed privately. CJIPs and plea bargains offered by public prosecutors are officially approved by judges by way of public hearing. Moreover, CJIPs are published on the AFA website.

There is no obligation to disclose settlements with administrative authorities to the public.

Anticipated developments

75 Do you expect to see any key regulatory or legislative changes emerge in the next year or so designed to address corporate misconduct?

France is proactive – various publications indicate regulatory and legislative amendments for the coming years.
The Criminal Policy Circular on the Fight Against International Corruption published in 2020 by the Minister for Justice confirms France’s intent to efficiently reduce corruption and the PNF’s paramount importance internationally.<§p>

The Airbus CJIP in a corruption case opens the way to negotiated justice – encouraging self-reporting, and full co-operation, including with foreign authorities.

The aim of the Gauvain Report is to restore French and European sovereignty and protect companies from extraterritorial control. It provides recommendations to reinforce the French legal framework applicable to foreign procedures targeting French companies, including strengthening the French Blocking Statute, introducing legal privilege for in-house counsels, and protecting data from the US Cloud Act by the threat of fines similar to those applicable to GDPR violations.

The following have also emerged during 2020:

  • a draft bill on extending CJIPs to apply to serious environmental crime;
  • the publication of practical guides by administrative authorities (e.g., CNIL and AFA) on professional reports and the anti-corruption compliance function; and
  • reinforcement of the national legal framework on the fight against money laundering and financing of terrorism.

Décideurs Magazine – Rankings 2021 – Dispute Resolution

Décideurs Magazine identifies Navacelle as “ Excellent ” – Guide Dispute Resolution – White collar crime in France in 2021.

See the ranking : www.magazine-decideurs.com
March 4 2021

Décideurs Magazine – Rankings 2021 – Criminal Tax Law

Décideurs Magazine identifies Navacelle as “ Excellent ” – Guide Litigation & Arbitration – Criminal Tax Law in France in 2021.

See the ranking: www.magazine-decideurs.com
25 February 2021

Décideurs Magazine – Rankings 2021 – Litigation & Arbitration

Décideurs Magazine identifies Navacelle as “ Excellent” – Guide Litigation & Arbitration – Litigation AMF, ACPR and Listed Transactions in France in 2021.

See the ranking: www.magazine-decideurs.com
15 February 2021

International Bar association Criminal Law Committee : Pro Bono Initiatives

Stéphane de Navacelle appointed Pro Bono Initiatives Officer of the International Bar association Criminal Law Committee.

February 12 2021

The European Public Prosecutor Office, a New Key Player for Corporate White-collar Crime Investigations?

The European Public Prosecutor Office, a New Key Player for Corporate White-collar Crime Investigations?

By Julie Zorilla, Princessa Fouda and Julia Velho for the American Bar Association International Law Section Publications.

***

Facing widespread concern about the huge losses affecting the European Union (“EU”) budget due to specific serious offences, the EU has set an independent European Public Prosecutor’s Office (the “EPPO”) up by a Council regulation dated 12 October 2017 (“Regulation”). Indeed, and despite the establishment of several European institutions such as Eurojust (2002) and OLAF (1999), the offenses related to the European Union budget were deemed insufficiently investigated and prosecuted in Europe. Similarly, the investigations conducted by Member States’ national authorities, which jurisdiction ceases at national borders, suffered from gaps in the judicial cooperation. The EPPO, as the first EU’s supranational authority is therefore responsible for investigating and prosecuting criminal offences affecting its financial interests in 22 out of the EU’s 27 Member States (“Participating countries”), including fraud, cross-border VAT fraud, money laundering, misappropriation and corruption. The EPPO will start operating as of 2021, already having appointed the first European Chief Prosecutor in October 2019, Laura Kovesi, and the full College of European Prosecutors in July 2020.   This independent authority which has a wide – even extraterritorial – jurisdiction, would be a potential significant addition to the white-collar enforcement landscape in the European Union that will strengthen complex and global investigations for all companies involved in EU projects or subject to the EU’s VAT regime.

In order to ensure its efficiency, Participating Countries have committed to respect the independence of the EPPO and “to not attempt to influence it in the performance of its assignment”. Similarly, the EPPO will not accept instructions from the EU institutions or national authorities.  From an operational point of view, the EPPO will operate as a single office divided into two levels: central and national level. The central level, which consists of the European Chief Prosecutor and the College of prosecutors, is in charge to (i) determine the criminal justice policy via decisions regarding the strategy and (ii) supervise the investigations conducted at the national level.The decentralized level, which consists of a European Delegated Prosecutor in each Participating country, carries out the investigation and prosecution on the national territory.   This divided structure enables the EPPO to ensure compliance with national rules while remaining independent of countries’ interference as the decisions are issued by the central level.

The EPPO is in charge to enforce the 2017 PIF Directive (“Directive”). This Directive harmonizes the definitions, sanctions and limitation periods of the criminal offences falling within the EPPO’s jurisdiction as well as extensively defines the concept of EU’s “financial interests” and therefore the jurisdiction rationae materiae of the EPPO.  As such, the EPPO will have jurisdiction to investigate offences affecting “all revenues, expenditure and assets covered by, acquired through, or due to the Union budget and the budgets of the institutions, bodies, offices and agencies”.   The Directive also enables the EPPO to pursue both authors and accomplices of these offences. It should be noted that a company can be under an investigation conducted by the EPPO only in the event that the offense has been committed by a person who has a leading position within the company and for the latter’s benefit. To broaden EPPO’s scope, the Directive defines however very briefly the concept of “leading position” based on (i) the power to represent the company (ii) the authority to take decisions on behalf of it, or the authority to exercise control within the company.  Similarly, the Directive makes no difference if the person acted “either individually or as part of an organ” of the company.   It therefore seems that the Directive aims at including a large number of persons within the company whose acts can incur the company’s liability. The purpose is to ease the prosecution of companies.  Further, the Directive only requires the Member States to implement corporate liability, whether criminal or not – administrative for example – with the aim, anew, of extending the scope of the EPPO.   Consequently, it appears that the EPPO will oversee a large number of offences, positioning itself as a new interlocutor that many companies have to consider.

According to OLAF report 2018, of the 84 investigations concluded in 2018, no less than 37 concerned a country outside the Union.   For this reason, the Regulation clearly aims at extending the territorial competence of the EPPO providing that “the EPPO should exercise its competence as broadly as possible so that its investigations and prosecutions may extend to offences committed outside the territory of the Member States”.  The Regulation therefore states that the EPPO will be competent to investigate and pursue foreign companies when (i) the offence is committed in whole or in part within the territory of one or several Member States or when (ii) the person who committed the offence is a national of an Member State or subject to the “Staff Regulations or to the Conditions of Employment”, provided in the last both cases that a Member State has jurisdiction for such offences when committed outside its territory.  Beyond extensive territorial competence, the EPPO also benefits from international cooperation tools. On the one hand, the EPPO will benefit from close cooperation with several EU agencies, inter alia, Eurojust, OLAF and Europol. On the other hand, the Regulation requires enhanced cooperation between the EPPO and third countries – e.g., working arrangements with the authorities of third countries and international organizations regarding the exchange of strategic information, international agreements concerning cooperation in criminal matters concluded by the EU etc.

The EPPO is promoted as the first step for enhanced supranational cooperation, opening the door to European jurisdiction in criminal matters. The Regulation and the Directive have therefore provided the EPPO with tools to become an important player in the European white-collar crime enforcement field in order, inter alia, to increase the level of protection of the EU budget and to provide a safer environment to all economic actors.  Recently created, one can already guess an extension of competence to areas other than European finance. This innovative initiative may indeed serve other cross-border fights such as terrorist crimes or serious environmental crimes. The EU shows a deep interest in increased cooperation in criminal matters at the European level, especially since the European Treaty on the Functioning of the EU foresees the possibility to extend EPPO’s jurisdiction to further forms of “serious crime having a cross-border dimension”.

Published on www.americanbar.org/groups/international_law/publications

PNF opens fewer cases amid pandemic slowdown

PNF opens fewer cases amid pandemic slowdown

France’s main anti-corruption enforcer took on fewer new cases in 2020 than the year before, a dip in activity most likely caused by the coronavirus.

Responding to a Freedom of Information request by GIR, France’s National Financial Prosecutor’s Office (PNF) said that it opened 735 new cases in 2020, down from 757 in 2079.

The PNF currently has 603 cases open in total as of 7 February, according to the agency’s own figures, covering three types of offences: market abuse, probity and damage to public finances.

The PNF defines probity cases as those centring on corruption, influence peddling and embezzlement, favouritism, illegal taking of public interest and electoral fraud.

lt said that it has 372 probity cases open, up from 294 at the end of 2079. Market abuse cases meanwhile went up from 42 to 46 over the same period, while damage to public finances cases, which include investigations into tax fraud and money laundering, went up by one to 245.

French lawyers said they noticed a dip in activity from the agency du ring the first few months of the coronavirus pandemic, but that things largely returned to normal by August 2020.

Thomas Baudesson at Clifford Chance in Paris said that the PNF managed well du ring the pandemic, which made certain investigative tasks like interviews and dawn raids more difficult.

Joydeep Sengupta at Mayer Brown in Paris said that the increase in probity cases may represent the PNF’s bigger appetite for pursuing corruption and tax fraud following its success in various recent high-profile matters linked to prominent multinationals.

The PNF’s efforts to punish corruption have been headlined by it leading the bribery investigation into aircraft manufacturer Airbus that resulted in a record­ breaking foreign bribery settlement. ln January 2020, the Company agreed to pay $4 billion to France, the UK and the US to resolve allegations of bribery offences a cross 16 countries. Other significant enforcement actions include the conviction of Swiss bank UBS in February 2019 for facilitating tax evasion. The bank, which is appealing against the decision, was ordered to pay a €3.7 billion fine. The PNF also signed a €500 million tax resolution with Google’s European arm in September 2019.

The cases contributed to the agency winning GIR’s enforcement agency of the year award in October.

Among the PNF’s biggest current cases are a tax evasion investigation into the French arm of JPMorgan, which has not commented publicly on the matter, and a corruption probe focused on French engineering company Alstom and the sale of its energy division to US energy company General Electric. The company denies wrong doing.

The PNF began operations in 2014 and significantly boosted its activity after it was granted the power to offer companies judicial public interest agreements, France’s answer to a deferred prosecution agreement, under the sweeping Sapin Il anti-corruption law in 2017.

Commenting on the agency’s performance over the past two years, Julie Zorrilla at Navacelle in Paris said: “the PNF has in effect matured into a coherent, consistent body, building on acting principles open to discussion with lawyers, yet still demanding“.

James Thomas for Global Investigations Review (GIR)
February 4 2021

Training session : Compliance inside Companies for AAF/DAV Frankreich

Stéphane de Navacelle speaks about the complexity of introducing an efficient compliance system, such as the subject of third-party audits, and the German project of introduction of legal entities criminal liability, for Deutscher Anwaltverein, alongside Michael Julian Chief Compliance Office (Accor), Lukas Inhoffen Senior Compliance Counsel (Knorr-Bremse AG), Antje Luke (Berg & Moll International Lawyers), Benedicte Querenet-Hahn (GGV Avocats) and Joshua Dibadj (Orth Kluth).

5 February 2021

GIR – PNF opens fewer cases amid pandemic slowdown

Julie Zorrilla interviewed on France’s National Financial Prosecutor’s Office (PNF) performance over the past two years.

Read the article
4 February 2021

Training session for Paris Bar : The role of the investigating lawyer

Stéphane de Navacelle speaks on the role of the investigating lawyer for Paris Bar as part of the Entrepreneurial Bar training cycle.

More info
February 2 2021

Judge-lawyer-legal counsel (MAJ) training session on judicial investigations

Stéphane de Navacelle participates under the auspices of the ENM – Ecole Nationale de la Magistrature – the AFJE – Association Française des juristes d’entreprise – and EFB – Ecole Française du Barreau – to the training sessions for Judges-Lawyers-Jurists on the “jucidial investigation”.

More information
January 31 2021

Internal criminal investigation fundamentals

Julie Zorrilla, Princessa Fouda and Sara Deyhim present lthe internal criminal investigation fundamentals for Compliances Magazine.

Read article
January 27 2021

Anti-corruption developments in jurisdictions around the world

International Bar Association Asset Recovery and Anti-Corruption Committees invited anti-corruption experts from around the world to meet in Paris to discuss the latest anti-corruption
developments in their jurisdictions

Read article
January 20 2021

IBA – Anti-Corruption Specialists Video – Anti-corruption developments around the world

IBA – Anti-Corruption Specialists Video
Anti-corruption developments around the world

Within the framework of the 17th Annual IBA Anti-Corruption Conference, the IBA Asset Recovery Subcommittee and the IBA Anti-Corruption Committee invited anti-corruption experts from around the world to Navacelle’s offices in Paris to discuss the latest anti-corruption developments in their jurisdictions.

The panel was chaired by the Senior Vice-Chair of the IBA Asset Recovery Subcommittee, Kate Mc Mahon , was released during the 2020 IBA meeting “Virtually Together”, and brought together a multitude of speakers – James Tillen, Partner at Miller & Chevalier Washington DC, Kara Brockmeyer, Partner at Debevoise & Plimpton LLP, Sabine Stetter, Managing Partner at Stetter Rechtsanwälte, Leopoldo Pagotto, Partner at FreitasLeite Advogados, Leah Ambler, Partner at RE/MAX Professionals Inc. and Stephane de Navacelle, Partner at Navacelle.

1. Overview: anti-corruption laws around the word

United Kingdom

In the UK, the Bribery Act 2010 came into force in July 2011 (…) to deal with corruption”, Kate Mc Mahon.

The Serious Fraud Office is the primary organization that deals with corruption in our country”, Kate Mc Mahon.

United States

The Foreign Corruption Act (FCPA) enacted in 1977 (…) prohibits covered entities and individuals from providing anything of value directly or indirectly to non-us officials to obtain a benefit”, James Tillen.

The FCPA doesn’t prohibit either commercial bribery or the taking of a bribe, it only prohibits the giving of a bribe. The US Government research other conduct such as the taking of a bribe or commercial bribery to other statutes such as the money laundering statutes”, Kara Brockmeyer.

Germany

The anti-corruption provisions concerning governmental officials have been in place in Germany for more than one hundred years”, Sabine Stetter.

Regarding the anti-corruption provisions concerning the private business sector, two different situations need to be distinguished. On the one hand, it is prohibited that advantages are being granted which can, in an abstract general sense, have an impact on competition. On the other hand, it is prohibited to grant advantages in order to make employees of companies breach their duties with regard to the company”, Sabine Stetter.

 “In Germany, the Public Prosecutor’s Offices are in charge of investigating corruption. There are special units which do nothing else but investigate corruption”, Sabine Stetter.

France

A law was passed, [four] years ago in December 2016, which we globally called the Sapin II Law”, Stephane de Navacelle.

 “It’s a huge change for us in France. The goal is to mirror the USA FCPA and the UK Bribery Act”, Stephane de Navacelle.

 “What it does, in a very French approach of the issue, is create a specific legal obligation with specific criteria for compliance system for companies (…) monitored by a specifically newly created agency, the Agence Française Anti-Corruption (AFA)”, Stephane de Navacelle.

Brazil

Brazil has had anti-corruption legislation for several decades. However, enforcement was ineffective. This scenario began to change in 2014 when Car Wash Operation started. It is the largest anti-corruption investigation that the world has ever seen”, Leopoldo Pagotto.

Brazil legislation has ruled out pretty much the same conduct, which is prohibited in most countries, the payment of improper advantage to public officers is considered as a criminal offense and also a civil and administrative offense for a corporation”, Leopoldo Pagotto.

As regard companies, the enforcement is made by several administrative and quasi-judicial bodies (…) the main body is CGO which is in charge of prosecuting the companies involved in corruption scandals”, Leopoldo Pagotto.

2. Overview: anti-corruption cases around the word

United-States

One recent case that highlights the scope of the FCPA and a recent phenomenal coordination settlement with the US Government and other countries, is Keppel Marine Offshore. Keppel Marine Offshore is a Singaporean company and has a US subsidiary and the parent entered into deferred prosecution agreement with US authorities relating to conspiracy to violate the anti-bribery provisions of FCPA. The US subsidiary entered into a plea agreement on the same charges”, James Tillen.

Relatively recently, the US and other countries brought an action against two telecommunications companies: VimpelCom and Telia. All torts, the two companies paid 1.76 billion dollars to resolve charges that they bribed the daughter of the former president of Uzbekistan (…) the reason why these actions are interesting is that these actions did not just bind the United States but also there was a parallel with other countries, the VimpelCom action was the first time that the US took action with the Netherlands, Kara Brockmeyer.

Germany

Probably the most important corruption scandal in Germany is still the Siemens scandal. The investigation by the Public Prosecutor Office in Munich in Germany started in 2006 with spectacular searches. There was also an investigation by the Department of Justice and the Securities and Exchange Commission in the United States”, Sabine Stetter.

In Germany, there is no corporate criminal liability, but we have a provision that led to corporate fines and disgorgement. Siemens had to pay two fines: one fine in the amount of 201 million euros and the other fine was 395 million euros which were actually for the lack of supervision due to a compliance system which was insufficient”, Sabine Stetter.

Brazil

Car Wash Operations has been led mostly by the federal police and the federal prosecutor. It started out of an investigation about money laundering (…). But after investigations, it became clear that this scam was much larger than just money laundering operations”, Leopoldo Pagotto.

It’s very hard to estimate how much money has been lost by the Brazilian government as a result of corruption. Economists have tried to make estimates but all of them are very limited in scope. So far, more than 3 billion dollars have been recovered”, Leopoldo Pagotto.

3. In practice: eliminating corruption

A global and consistent standard against corruption around the world is vital to eliminating this crime, and what is needed is the harmonization of laws across jurisdictions so everyone is playing by the same rules”, Leah Ambler.

Foreign corruption cases are one of the few areas where there are incredibility difficult cases to investigate and prosecute without the cooperation of other states (…) it is vitally important that there be a consistent standard that is applied by prosecutors across every jurisdiction, Kara Brockmeyer.

A global and consistent anti-Corruption enforcement is important because there is globalization nowadays (…) it means that anyone can transfer money and proceed with crimes from one country to the other in less than two or three minutes. This makes asset tracking and punishment of individuals and companies involved very difficult”, Leopoldo Pagotto.

 “It is very important to make sure law enforcement works in all countries all over the world when it comes to corruption. Local law enforcement is something that is taken very seriously and it is an important factor in the fight against corruption worldwide”, Sabine Stetter.

 “The participation of civil society is also an important factor to decrease corruption. In the past years, the increasing awareness about corruption led the population to engage in a serious civic campaign to change and amend legislation (…) this is how actually democracy can work in the fight against corruption”, Leopoldo Pagotto.

 “The large part due to the effort of the Organization for Economic Co-operation and Development (OECD). Many other countries have now similar anti-corruption laws and are enforcing them”, James Tillen.

View the video

Kate Mc Mahon (Edmonds Marshall McMahon), James Tillen (Miller & Chevalier Washington DC), Kara Brockmeyer (Debevoise & Plimpton LLP), Sabine Stetter (Stetter Rechtsanwälte), Stéphane de Navacelle (Navacelle), Leopoldo Pagotto (FreitasLeite Advogados), Leah Ambler (Re/Max professionals Inc) and Stephen Baker (Baker & Partners).

French Anticorruption Agency’s updates recommendations regarding anticorruption programs

Julie Zorrilla, Princessa Fouda and Héloïse Vigouroux showcase the update to the French Anticorruption Agency’s recommendations for private and public legal entities to fight corruption.

Read article
January 15 2021

Update of the French Anticorruption Agency’s recommendations regarding anticorruption programs

Update of the French Anticorruption Agency’s
recommendations regarding anticorruption programs

Pursuant to the provisions of French Sapin II Law (“Loi Sapin II”)1, the French Anticorruption Agency (“AFA”) issued recommendations aimed at assisting public and private legal entities – whether they are subject or not to the obligation provided for in Article 17 of the Sapin II law to implement preventive and detective measures against corruption2 – in their initiatives to prevent and detect integrity violations within their entities.

As well as the national diagnosis launched by AFA to assess the effectiveness of corruption prevention and detection systems implemented within companies3, the recommendations’ update is part of the first steps of the multi-year national anti-corruption plan 2020-2022 carried out by AFA and approved by the government in early 2020 4.

AFA therefore improves its recommendations as to the 8 pillars of Article 17 of Sapin II law. Hence, the scope of the risk mapping is extended to the risks of influence peddling5. AFA further recommends the extension of the third-party category submitted to due diligence to include third parties with whom the company would like to enter into a relationship for the purpose of an acquisition or for sponsorship6. In addition to training initiatives intended for managers and most exposed employee, AFA urges to raise all employees’ awareness regarding the fight against corruption7. With regard to the internal control and audit system, AFA recommends the establishment of a specific procedure setting out “the processes and situations involving identified risks, the frequency of controls and their procedures, the persons in charge of these controls and the rules for transmitting the results to the management body8.

Furthermore, AFA strengthens the authority of its recommendations. Despite not being legislative in nature, the recommendations are now “opposable” against AFA as part of its inspections9. Accordingly, in the context of an AFA inspection, companies henceforth benefit from a presumption of compliance when they indicate having designed their compliance program in accordance with AFA’s recommendations. It then falls to AFA to demonstrate that this application has been “ineffective, incorrect or incomplete”.10. This amendment is in line with and confirms the decision of the Sanction Commission issued on July 4, 2019, which states that when a company indicates having complied with the methodology recommended by the AFA, “it must be deemed to have provided sufficient information, unless the Agency proves that it failed, in reality, to follow the recommendations11.

Check out the new AFA’s recommendations.

***

Julie Zorrilla, Partner Navacelle Paris
Princessa Fouda, Associate Navacelle Paris
Héloïse Vigouroux, trainee lawyer EFB

The European Public Prosecutor Office : A New Key Player for Corporate White-Collar Crime Investigations

Julie Zorrilla, Princessa Fouda and Julia Velho showcase the European Public Prosecutor’s Office (EPPO) launched in 2021 to investigate and prosecute ‘crimes against the EU budget.

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January 13 2021

US Congress passes Anti-Money Laundering Act of 2020

Julie Zorrilla, Princessa Fouda and Martin Méric highlight the strengthening of American anti-money laundering legal framework.

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January 13 2021

France 24 – Trump Impeachment procedure

Stéphane de Navacelle answers Mariam Pirzadeh questions on the US impeachment procedure.

JT France 24
January 11 2021

Plea Bargaining and Deferred Prosecution Agreements in France

Stéphane de Navacelle, Clémentine Duverne and Thomas Lapierre showcase the French mechanisms for deferred prosecution agreements and plea bargaining.

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January 7 2021

Plea Bargaining and Deferred Prosecution Agreements in France

Plea Bargaining and Deferred Prosecution Agreements in France

By Stéphane de Navacelle, Clémentine Duverne et Thomas Lapierre for the Association of Corporate Counsel (ACC)

***

To avoid long and publicly exposed trial, legal persons and their executives may resort to negotiated justice mechanisms in France such as deferred prosecution agreement (“Convention Judiciaire d’Intérêt Public”, or “CJIP”), or plea bargaining (“Comparution sur reconnaissance préalable de culpabilité”, or “CRPC”). French criminal law does not however have a very long-standing tradition of negotiated justice and the CJIP introduced by the Sapin II law in 2016 renewed the use of the CRPC. The following may be useful to know for in-house counsel advising businesses that operate in France (or working in French businesses that operate in other countries):

Legal entities may enter into CJIP, i.e., settlement with prosecutors for white collar offences, subject to court approval. A CJIP involves inter alia (1) payment of a fine; (2) and implementation of a compliance program. A CJIP also circumvents the drawbacks of a criminal conviction for legal entities such including the exclusion from public procurements.

The opportunity to offer a CJIP and the amount of the fines are assessed by the prosecutor on three main criteria: (1) the legal entity’s criminal background; (2) the entity’s voluntary and prompt disclosure of facts to the authorities; (3) and cooperation with authorities, highlighted by the entity’s early initiative to conduct internal investigation.

A CJIP does not preclude criminal proceedings against the legal entity’s executive managers and admission of facts made in the CJIP will necessarily influence the defence of individuals involved. In that respect, in conjunction with a CJIP, Public prosecutors may offer or agree to a plea bargain (“CRPC”) with the executives subject to their prior admission of guilt. The CRPC entails reduced sentences, yet it has the same effect as a criminal conviction.

When companies face allegations of white-collar crimes, in-house counsels should therefore act promptly and determine whether French Law is applicable and whether the conditions to resort to negotiated justice mechanisms are met. They could also pre-emptively initiate internal investigations and enhance their compliance program to demonstrate cooperation with authorities. To this end, in-house counsels may seek independent attorneys to build a proactive and adequate strategy, to conduct independent internal investigation, negotiate with prosecutors and later foster improvements of the entity’s compliance program.

Stéphane de Navacelle, Partner Navacelle Paris,
Clémentine Duverne, Partner Navacelle Paris,
Thomas Lapierre, Associate Navacelle Paris.

Read full article on ACC
January 7 2021

Award from Leaders League in Compliance.

Navacelle recognized by Leaders League (Décideurs) in the category Compliance for the Trophées du Droit.

Learn more about Compliance: navacellelaw.com/fr/lenquete-interne-vos-principales-preoccupations/

January 5 2021

DÉCIDEURS Magazine identifies Navacelle as “ Excellent” – Guide Litigation & Arbitration – Litigation AMF, ACPR and Listed Transactions in France in 2020.

Navacelle identified by Décideurs as “Excellent” in Litigation & Arbitration – Litigation AMF, ACPR and Listed Transactions in France in 2020.

www.magazine-decideurs.com
December 29 2020

DÉCIDEURS Magazine identifies Navacelle as “Strong reputation” – Guide Compliance & Fraud – Compliance program in France in 2020.

Navacelle identified by Décideurs as “Strong reputation” in Compliance & Fraud – Compliance program in France in 2020.

See ranking
December 22 2020

Internal investigations: roundtable discussions

We are excited to announce the launch of a new initiative led by FRA and Navacelle bringing together French in-house and outside counsel investigations and compliance professionals for roundtable discussions focused on internal investigations-related issues.

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December 18 2020

Navacelle is joined by Thomas Lapierre as Associate

Admitted to both the Paris and the New York Bars, Thomas Lapierre joined Navacelle as an associate in 2020. He focuses on white-collar crime defence and the implementation of compliance programs within companies.

Biography
December 17 2020

Decision of the Versailles Court of Appeal on December 9, 2020: first clarifications on the provisions of the corporate duty of vigilance law

Decision of the Versailles Court of Appeal on December 9, 2020: first clarifications on the provisions of the corporate duty of vigilance law.

According to Article 1 of the “corporate duty of vigilance law”1, codified in Article L.225-102-4 of the Commercial Code, companies registered in France that employ at least five thousand employees within headquarters and their direct or indirect subsidiaries, or companies registered in France or abroad that employ at least ten thousand employees within headquarters and in their direct or indirect subsidiaries, have the obligation to establish and implement a due diligence plan, aimed at identifying and preventing risks of serious harm to human rights, fundamental freedoms, health and safety, and the environment, on account of their activities and those of their subsidiaries, suppliers and subcontractors with whom they have an established business relationship, and when these activities are related to this relationship. In the event of non-compliance with this legal requirement, and within three months of formal notice, any person with standing may request the competent court to compel the company to comply with it by injunction, under penalty if necessary. The law does not however, provide any clarification as to the competent court to hear such injunction claims.

While welcomed for its innovative character, the corporate duty of vigilance law was criticized from the outset – during the parliamentary debates – for its lack of clarity. The Versailles Court of Appeal’s decision of December 9, 2020, although not yet final, provides much-needed clarification in relation to the competent court to hear injunction proceedings2.

In this decision, in which the appellant associations, i.e. Friends of the Earth France, National Association of Professional Environmentalists and Africa Institute for Energy Governance, faced SA (Société Anonyme) Total, the Court confirmed the lack of jurisdiction of the Nanterre judicial court. Rather, it confirmed the jurisdiction of the commercial court to oversee the injunction proceedings brought by French and Ugandan NGOs, seeking to compel Total to comply with its obligations under the corporate duty of vigilance law, for activities operated by two of its subsidiaries and concerning two oil projects in Uganda and Tanzania.

In doing so, the Court reasoned in two stages.

The Court recalled the principle that the commercial court is a special jurisdiction and that only the application of a special rule can justify moving away from the common law jurisdiction of the judicial court. The Court drew from the lack of clarity of the provisions of the corporate duty of vigilance law in relation to jurisdiction that there was no special rule for resolving the dispute and determining which of the commercial court or the judicial court had jurisdiction.

Accordingly, it analyzed the common law provisions of the French Commercial Code. The Court of Appeal stressed that to characterize a dispute relating to commercial companies, it was important to show a direct link between the facts at the origin of the claim and the management of the company, referring to Article L. 721-3 2° of the Commercial Code, which provides that “the commercial courts rule on [disputes] relating to commercial companies” and “those relating to commercial between all persons”. Consequently, the Court decided that it was irrelevant whether the disputed act was the act of a salesperson, of a manager or of the parent company, thereby choosing not to follow the argument of the NGOs, which maintained that a direct link between the facts subject of the claim and company management by a de facto or de jure manager must exist to trigger the special jurisdiction of the commercial court.

To establish the link between the facts at the origin of the claim, the establishment of a due diligence plan and the management of the company, the Court of Appeal partially followed SA Total’s reasoning. It noted that the legislative provisions of the corporate duty of vigilance law were introduced in article L. 225-102-4 of the Commercial Code, in Title II concerning commercial companies, in Chapter V concerning public limited companies and in Section 3 concerning shareholders’ meetings. It also emphasized that the due diligence plan and the report on its implementation were to be appended to the annual management report, which is presented at the shareholders’ meeting, thus integrating social and environmental issues into the business of the commercial company. The Court held that the corporate duty of vigilance law necessarily impacts the functioning of the company, in that it imposes an obligation of transparency and disclosure on corporate governance. The Court thereby inferred that there is a link between the establishment of a due diligence plan and the management of the company.

The Court pointed to other obligations imposed on companies by the corporate duty of vigilance law that highlight the existence of a link between the due diligence plan and the management of the company. For instance, companies are required to set up an alert mechanism that must be established “in consultation with representative trade union organizations”. This mechanism reinforces the idea that the elaboration of the due diligence plan is the responsibility of company management because it requires an exchange with social partners.

Finally, the Court rejected the idea of a jurisdictional option that was possible under the mixed act theory. On the contrary, the Court of Appeal considered that the disputed act could not be characterized as a civil act – the company establishing the due diligence plan and remaining the sole entity subjected to this legal requirement.

This appeal-level court decision could be overruled, unless the Cour de cassation were to be called to issue a final ruling on the matter. Let us wager however, that the continuation of this case, before the Cour de cassation or on the merits, will bring new and warranted clarifications as to the application and even the effectiveness of this corporate duty of vigilance law.

Julie Zorrilla, Partner Navacelle Paris
Sarah Reilly, Associate Navacelle Paris
Julia Velho, trainee lawyer EFB

Navacelle discusses the recent Versailles Court of Appeal decision which clarifies the French Corporate Duty of Vigilance Law and rules on the competent court for injunction proceedings seeking to enforce the Law’s obligations.

Navacelle analyzes the recent Versailles Court of Appeal decision (December 9, 2020), which clarifies the French Corporate Duty of Vigi-lance Law and rules on the competent court for injunction proceedings seeking to enforce the Law’s obligations..

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December 14 2020

We hire – traineeships for June-December 2021

Navacelle has opened recruitment of trainee lawyers/trainees for June-December 2021. Trainees are fully involved in client matters and life of the firm. Each lawyer actively contributes to the professional training of trainees.

Prior experience at law firms/in-house and fluent English are required. A third language is a considerable asset. Applications expected at info@navacellelaw.com.

Navacelle is a white-collar crime, global investigation, regulatory defense, arbitration and complex litigation firm based in Paris.

December 11 2020

Navacelle contributes to the International Bar Association Alternative and New Law Business Structures Committee and the Professional Ethics Committee joint newsletter by an article on “Cloud computing and the challenges facing professional secrecy”

Stéphane de Navacelle and Clémentine Duverne, Partners Navacelle, and Sarah Reilly, Associate Navacelle, contributors to the International Bar Association Alternative and New Law Business Structures Committee and the Professional Ethics Committee joint newsletter by an article on “Cloud computing and the challenges facing professional secrecy”.

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December 10 2020

Navacelle contributes to the International Bar Association Alternative and New Law Business Structures Committee and the Professional Ethics Committee joint newsletter by an article on “Cloud computing and the challenges facing professional secrecy”

NAVACELLE contributes to the International Bar Association Alternative and New Law Business Structures Committee and the Professional Ethics Committee joint newsletter by an article on “Cloud computing and the challenges facing professional secrecy”

Read article on www.ibanet.org

During the Covid-19 crisis and the resulting lockdown, the use of telework in France increased considerably, including in law firms.

In light of this, the French National Commission for Data Protection and Liberties (CNIL) published recommendations to better ensure personal data security. Referring to a list of certified products1, the CNIL advised that companies equip employee workstations with firewalls, encryption tools, antivirus software and, for cloud usage, protocols guaranteeing the confidentiality of the destination server, authentication mechanisms and regular verifications of access logs to limit the risk of intrusion2.

These information security considerations are relevant for lawyers, for whom the principle of professional secrecy in relation to client information and correspondence is critical. While professional secrecy was historically ensured in a material fashion, with client information preserved in paper files, client information now extends beyond the realm of the law firm offices, with the prevailing trend of digitalisation of the legal profession.

An enhanced accompanying regulation of cloud computing is thereby necessary to ensure the prevention of loss, theft or leaks of client data and uphold the cornerstone principle of the profession.

Cloud computing runs the risk of going against professional secrecy

A robust legal and regulatory framework lays the foundations of professional secrecy

On a European level, professional secrecy is enshrined as a fundamental right by the European Court of Human Rights. It is covered by Article 8 of the European Convention on Human Rights on the right to respect for private and family life in that it protects ‘the confidentiality of all “correspondence” between individuals’ and ‘affords strengthened protection to exchanges between lawyers and their clients’3.

Article 1.1 of the Charter of Core Principles of the European Legal Profession expressly lists ‘the right and duty of the lawyer to keep clients’ matters confidential and to respect professional secrecy’4. Article 2.3. of the Code of Conduct of the Council of Bars and Law Societies of Europe (CCBE) stresses the importance of confidentiality5. These provisions showcase the benefit of protection awarded to lawyer-client communications but also the lawyers’ duty to ensure confidentiality and professional secrecy – as do the provisions in France on a national level.

Article 66-5 of the Law of 31 December 1971 provides that ‘in all matters, be it for counseling or litigation […] correspondence exchanged between both parties, or between lawyers […] and all documents in the file are covered by professional secrecy’6. Article 2 of the National Internal Rules applicable to lawyers provides that ‘professional secrecy is a matter of public order. It is general, absolute and unlimited in time’7.

Lawyers are thereby prohibited from waiving professional secrecy in all circumstances – and this even when permitted to do so by their client – save for expressly limited cases. Indeed, Article 4 of the Decree of July 12, 2005, provides that ‘subject to the strict requirements of their own defense before any court of law and to the cases of declaration or disclosure provided for or authorized by law, lawyers shall not, in any matter, make any disclosure that contravenes professional secrecy’8.

Lawyers can be held criminally liable should they breach professional secrecy. Article 226-13 of the Criminal Code provides that ‘the divulgation of information of a secret nature by a person who is in possession of it either by state or profession, or because of a temporary function or mission, is punishable by one year’s imprisonment and a fine of 15,000 euros’9.

This marked obligation to maintain professional secrecy in all circumstances warrants heightened scrutiny on the part of lawyers when considering the risks posed by the increasing digitalisation of the profession.

A digitalisation of the profession poses risks to professional secrecy

Many law firms now operate with cloud computing, which can jeopardise professional secrecy if data is lost, stolen, or seized.

Loss and theft of data can be the result of accidental deletion, hacking, or insufficiently secure access to cloud systems. Solutions to mitigate these risks are available, such as user identity control, encryption key changes and agreements with cloud service providers that allow for switchover systems or data recovery. They fall short, however, of alleviating lawyers of their ethical obligations.

Seizure of data on the cloud, while complexifying raid operations in law firms by dematerialisation, can increase the risk of data that is covered by professional secrecy being seized – all the more so when involving foreign investigation and prosecution authorities.

Article 56-1 of the Criminal Procedure Code10 governs the conduct of raids in law firms or lawyers’ homes and identifies protective measures for professional secrecy. For example:

  • a judge and the head of the Bar (Bâtonnier) must be on-site to oversee the raid;
  • the Bâtonnier can consult the seized documents and contest the seizure of documents before a judge; and
  • the judge must ensure that the raid does not obstruct the exercise of the legal profession.

Some provisions may encroach upon the protections of this article. For instance, in the move towards fighting cybercrime, Article 57-1 of the Criminal Procedure Code on raids11 was amended to add that investigation authorities can carry out remote information system searches, be they located on-site or in another system accessible via the on-site system.

Article 56-1 of the Criminal Procedure Code does not expressly prohibit remote information system searches12, thereby creating somewhat of an uncertain legal landscape regarding the extent to which cloud information covered by professional secrecy is protected from raids.

Furthermore, Article 706-102-1 of the Criminal Procedure Code13 pertaining to crime and organised crime, provides that the investigating judge (juge d’instruction) can decide to set up, in all locations, a technological mechanism that can access, record, store and transmit computer data, without the consent of the persons involved. While Article 56-1 of the Criminal Procedure Code implies that such a mechanism should not be used for automated data processing systems located in a lawyer’s office or home, it is not excluded that it could be used when the location of a data processing service provider, for example for cloud computing, is outsourced by the law firm, in detriment of professional secrecy14.

Soft law regulates cloud computing, empowering lawyers to provide the necessary safeguards to maintain professional secrecy

Ordinal body and administrative agency recommendations guide lawyers

While there is no defined legislative or regulatory framework on cloud computing, recommendations and guidelines have been published on the subject by the CNIL, the CCBE, and the National Council of the Bars (Conseil National des Barreaux (CNB)).

The CNIL issued a dedicated practical guide for lawyers, written from a personal data protection perspective drawn from the law on information technology and freedoms15. It states that ‘the lawyer, as the one responsible for processing the information, is bound by a duty of security [and] must take all necessary measures to guarantee its confidentiality’16, adding examples of measures and specifying that cloud computing ‘raises issues of the qualification of the parties, the applicable law, the effective exercise of the rights and supervision of international transfers of personal data’17.

The CCBE issued guidelines for lawyers using cloud computing, recommending that prior to signing a related contract, lawyers must first conduct a preliminary review of the cloud computing services, including:

  • the applicable data protection professional secrecy legislation to ensure that there is no obligation to disclose data to non-European national authorities;
  • the data encryption procedures;
  • the due diligence performed on the provider;
  • the security of the data centre; and
  • the level of risk associated with the information processed.

The lawyers must determine the relevance of negotiating contractual clauses and informing the customer about ‘the legal standards regarding data protection, privacy and professional secrecy in the countries where the servers are located’18.

The CNB issued a Vademecum of digital ethics, which includes the above-mentioned CCBE recommendations19 A guide for lawyers and the General Data Protection Regulation (GDPR) was also published, stating that lawyers must be ‘particularly exemplary’ with respect to professional secrecy – a ‘keystone principle’ despite technological evolutions. Lawyers must thereby ensure that their associates and external services providers also have this concern in mind, namely when outsourcing firm data via cloud computing20.

Although these guidelines help lawyers to adopt appropriate security levels when using cloud computing, while still leaving room for flexibility and freedom in their implementation – in keeping with the independent status of the French avocat liberal – it is wholly still up to lawyers to act in compliance with the rules of their profession.

This empowering of the individual benefits some in the lawyer profession, that is, those in a position to negotiate secure information systems and those who have the necessary experience and knowledge. Others, however, exercise their profession with the looming threat of litigation in the back of their minds, as the consequences of non-abidance by the recommended standards remain unclear – be they criminal sanctions on the basis of a breach of professional secrecy, or ethical sanctions by a bar association.

French Bar offers technological solutions to lawyers

In an effort to put into practice the soft law on cloud computing and alleviate the risk of professional secrecy breaches, a private cloud21 was set up in 2016 for lawyers of the French Bar. It provides a connection to a cloud via a dedicated key or dual-factor authentication and offers a messaging system with encrypted archiving, a centralised lawyer directory to facilitate confidential communications and a drive on which the data can also be encrypted. The cloud features automatic encryption alongside encryption that can be performed by the lawyers to ensure that only the concerned lawyer has access to the relevant communications.

This type of initiative is paramount to ensuring that professional secrecy remains attainable to lawyers in a context of increased digitalisation. While it is a first step in the direction of harmonised solutions for lawyers using cloud computing, it does not fully compensate for the shortcomings of soft law regulation.

The legal and regulatory vacuum on cloud computing results in unpredictability of the courts’ stance with respect to a lawyer’s failure to ensure professional secrecy on account of lost, stolen or seized data via cloud. As it stands, lawyers have the duty to oversee that those who are intrinsically linked with the exercise of their profession, including firm associates and external service providers, comply with the issued recommendations. To this extent, lawyers are solely responsible of implementing the necessary safeguards to preserve professional secrecy and must show proof of heightened scrutiny in an age where data crosses walls.

Stéphane de Navacelle, Partner Navacelle Paris
Clémentine Duverne, Partner Navacelle Paris
Sarah Reilly, Associate Navacelle Paris

Notes :

Navacelle analyses recent overturn of the French Cour de cassation case law regarding the criminal liability of the acquiring company for acts committed by the acquired company prior to merger by acquisition.

Navacelle thought you might be interested by a succinct analysis of the recent overturn of the French Cour de cassation case law regarding the criminal liability of the acquiring company for acts committed by the acquired company prior to the merger by acquisition.

Read memorandum
December 8 2020

Navacelle discusses “Sapin II and the French #anticorruption system” at the International Chamber of Commerce México’s Anticorruption Diploma

Stéphane de Navacelle, Partner Navacelle, invited by Luis Dantón Martínez Corres, LEC, to discuss “Sapin II and the French #anticorruption system” at the International Chamber of Commerce México‘s Anticorruption Diploma alongside Nicola Bonucci, Paul Hastings LLP.

www.iccmex.mx
December 7 2020

Navacelle contributes to the International Bar Association Criminal Law Publications: “The Inspection of Justice report on the PNF investigation for breach of professional secrecy: attorney-client privilege under spotlight in France”

Julie Zorrilla, Clémentine Duverne and Laurine Becker, Navacelle, contributors to the International Bar Association Criminal Law Publications by an article on “The Inspection of Justice report on the PNF investigation for breach of professional secrecy: attorney-client privilege under spotlight in France”.

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December 2 2020

The Inspection of Justice report on the PNF investigation for breach of professional secrecy: attorney-client privilege under spotlight in France

Navacelle contributes to the International Bar Association Criminal Law Publications.
Read article on www.ibanet.org

The Inspection of Justice report on the PNF investigation for breach of professional secrecy: attorney-client privilege under spotlight in France

Over the years, the National Financial Prosecutor’s Office (PNF) has built a solid international reputation by supervising the signing of deferred prosecution agreements (DPAs or convention judiciaire d’intérêt public) with large French companies and most of the time, in cooperation with international authorities such as the United States Department of Justice or the United Kingdom Serious Fraud Office1. Several major concerns over political interference, potential abuse of power and claims of sexual harassment targeting the PNF have however been leaked into the media.

In early 2020, a French newspaper revealed that the PNF2 had carried out investigations had on several lawyers’ phones3 within the context of a preliminary investigation opened in 2014 for breach of professional secrecy and in connection with former President of the French Republic Nicolas Sarkozy’s case.

The investigation aimed at identifying the informer who would have told Sarkozy’s lawyer, Thierry Herzog, that the phone his client used under the false identity of Paul Bismuth, was being tapped. The PNF investigation was linked with the judicial inquiry into influence peddling and corruption involving Sarkozy and Gilbert Azibert, a former magistrate of the French Supreme Court.

The PNF has been probing phone records, also called FADETS, of several Parisian lawyers, including Eric Dupond-Moretti, who filed a complaint for breach of professional secrecy on 30 June 2020. At the same time, the former Minister of Justice Nicole Belloubet referred the matter to the Inspection of Justice.

On 6 July 2020, Dupont-Moretti was appointed Minister of Justice and withdrew his complaint. The investigation opened after this complaint was finally closed by the Prosecutor of Nanterre on 2 October 2020, due to the lack of evidence of a criminal offence.

A report on the inspection of the operation of the investigation conducted by the PNF (the Inspection of Justice Report, the ‘Report’) was published on 15 September 2020.

Although the Inspection of Justice Report expressly mentioned that the provisions of the French criminal procedure code on the requisitions of phones tapping does not provide for any specific obligation with respect to lawyers (such as what may exist for dawn raids in law firms) and concluded that no particular issue in handling the investigation was found, many professionals have highlighted the lack of adversarial process in the preliminary investigation and demanded a strengthening of professional secrecy.

Indeed, given the limited circumstances under which lawyers can demand access to the file at the preliminary investigation stage4, the fact preliminary investigations could be very lengthy and that some investigations can be carried out on lawyers’ phones, some claim that it may lead to a violation of the rights of the defence, which must be strengthened, in particular through enhanced protection of professional secrecy.

According to the Inspection of Justice Report, access to lawyer’s phone records during a preliminary investigation does not violate professional secrecy

The Inspection of Justice considered that investigations carried out on lawyer’s phones were lawful

The Inspection of Justice considered that the public prosecutor could request listing incoming and outgoing calls received and made by specific lawyers. The Report emphasises that the criminal procedure code governing calls requisitions did not contain any restriction related to the practice of a profession whose professional secrecy is legally protected5.

The Report also emphasised that this investigative measure is in line with French jurisprudence. Indeed, the French Supreme Court ruled in 2016 that FADETS did not fall into the category of coercive measures6. The French Supreme Court also ruled that attorney-client conversations can be transcribed in the criminal procedure when they presume the participation of the lawyer in an offence7. The European Court of Human Rights (ECHR) adopted the same criteria in the Versini-Campinchi et Crasnianski v France decision8.

In other words, investigators can listen in to a private conversation between a lawyer and his client to check whether it reveals the lawyer’s involvement in an offence. If it does, then the conversation may be transcribed in the procedure, if not, it should not be transcribed9.

The Report however mentioned that in the investigation at hand ‘the drawing up of police reports on the receipt and use of the data collected attests the investigators’ concern not to expose excessively the private life or professional secrecy of the holders of the lines operated’10.

The Inspection of Justice Report nevertheless pointed out weaknesses on the functioning of the PNF investigations

Although the Report specified that due to the respect of the independence of the prosecutors, the mission did not appreciate the proportionality of the acts of investigation and the duration of the preliminary investigation opened for violation of professional secrecy. It pinpoints ‘a lack of rigour’ in the handling of the PNF investigation and underlined the fact that the preliminary investigation had lasted for more than five years.

In France, the duration of preliminary investigations is uncontrolled due to the principle of prosecutors’ independence.

The Report also emphasised the limited access to a preliminary investigation before its completion, given the fact that a person heard during the investigation (whether freely or in custody) can request access to the proceedings only after a year, and that the refusal is at the discretion of the prosecutor11.

The Report added that the current legal framework with the limited implementation of the adversarial principle provided by Article 77-2 II of the French Criminal Procedure Code revealed the ‘limits’ of this mechanism which does not allow any procedural nullity to be purged before trial12.

Professionals request a strengthening of the rights of the defence at the preliminary investigation stage

Rules governing the protection of professional secrecy during investigations

Under French rules of professional conduct, attorney-client privilege is a general, unlimited and absolute rule13, meaning it applies to the entire correspondence between lawyers and their clients, regardless of its content14. Clients or any authority whatsoever cannot relieve the lawyer of their duty of confidentiality15. A breach of professional secrecy by a lawyer could lead to both criminal and disciplinary sanctions16.

In a decision rendered on 24 July 2015, the Constitutional Council, in charge of reviewing the constitutionality of legislation, ruled that no constitutional provision specifically admit a right to the secrecy of lawyer’s exchanges and correspondence and a right to secrecy of journalists’ sources17.

French law nonetheless provides several guarantees aiming at maintaining professional secrecy in the exercise of specific professional activities. For instance, under the French criminal procedure code, when the public prosecutor wishes to search a law firm, to seize lawyer’s correspondence, they must obligatorily warn the president of the bar18. Real time location of a lawyer at their firm or home is strictly forbidden19. Violations of these rules lead to the nullity of the entire investigation.

The public prosecutor is in charge of controlling the proportionality of the investigative acts20.

Lawyers emphasise the need to strengthen the protection of attorney-client privilege

Underlining that phones requisitions do not contain any restrictions related to the exercise of a profession in which professional secrecy is protected, lawyers asked for additional guarantees such as systematically notifying the president of the bar and giving them the ability to intervene to protect phone data covered by the attorney-client privilege21.

Furthermore, the fact that some preliminary investigations are very lengthy combined with the limited access to the proceedings and the fact that investigations can be carried out on lawyers’ phones reinforced the view that some investigations can infringe the rights of the defence.

Indeed, the Report underlines that lawyers’ representatives met by the mission raised the issue of the insufficiency of guarantees and the lack of adversarial principle in the preliminary investigation22.

A report on behalf of the Commission of inquiry into the obstacles to the independence of the judiciary, dated 2 September 2020, has recommended the reinforcement of the control of the duration of preliminary investigations by the creation of a ‘criminal investigation judge’ who could, after a certain period of time, hear the prosecutor and all parties to the case, before deciding whether to authorise the continuation of the preliminary investigation23.

In his inaugural speech, the current Minister of Justice Eric Dupond-Moretti also stated that ‘I will ensure that preliminary investigations remain preliminary and are not eternal as it is sometimes the case.’ 24

In addition, the report of the mission on the future of the legal profession delivered to the Minister of Justice by Dominique Perben on 26 August 202025, concludes that it is necessary to strengthen the professional secrecy of lawyers, both in terms of defence and advice. It recommends in particular that, in the context of an investigation led by the public prosecutor’s office, getting access to a lawyer’s telephone records should only be possible with prior authorisation of the liberty and custody judge motivated by clear evidence of the lawyer’s participation in the commission of an offence26.

Clémentine Duverne, Partner Navacelle Paris
Julie Zorrilla, Partner Navacelle Paris
Laurine Becker, Associate Navacelle Paris

Notes :

Navacelle contributes to the International Bar Association European Regional Forum Publications: “What if future EU mandatory human rights due diligence legislation comes to rescue of French Corporate Duty of Vigilance law?”

Clémentine Duverne, Julie Zorrilla and Thomas Lapierre, Navacelle, contributes to the International Bar Association European Regional Forum Publications: “What if future EU mandatory human rights due diligence legislation comes to rescue of French Corporate Duty of Vigilance law?”.

Read article
November 26 2020

Navacelle discusses Covid-19’s relief funds and their abuse in France at the International Bar Association 2020 – Virtually Together

Stéphane de Navacelle, Partner Navacelle, discusses alongside Jessica Parker, Corker Binning and Manavendra Mishra, Khaitan and co., and moderated by Jason Linder, Mayer Brown, and Simone Nadelhofer, Lalive, abuses Covid-19 relief-funds and governments approach to prosecuting abuses at the International Bar Association 2020 – Virtually Together.

November 23 2020

What if future EU mandatory human rights due diligence legislation comes to rescue of French Corporate Duty of Vigilance law?

Navacelle contributes to the International Bar Association European Regional Forum Publications.
Read article on www.ibanet.org

What if future EU mandatory human rights due diligence legislation comes to rescue of French Corporate Duty of Vigilance law?

The 2017 French Corporate Duty of Vigilance Law1 (hereinafter DVL) has established a legally binding obligation for companies which, at the end of two consecutive financial years, employ at least five thousand employees in France or ten thousand within the company and its subsidiaries2, to prepare, publish and implement a vigilance plan.

For the approximately 150 companies falling under the scope of this law3, a vigilance plan must thus provide reasonable measures to be implemented within the company. Those measures aim to identify and prevent serious human rights and fundamental freedom violations resulting from the company’s activities, from activities of its subsidiaries, its subcontractors and its suppliers, or from entities with whom the company has an established commercial relationship4.

However, questions remain with respect to the scope of this law. Indeed, it remains unclear whether it refers exclusively to the first tier of a supply chain (direct contractual partner) or to its additional tiers further along the chain5. In addition, there are no implementation decrees, or clear legal definitions provided by the law of what constitutes a serious human rights violation.

The idea of addressing certain elements of human rights due diligence by establishing laws and policies has been gaining momentum across the European Union (UK’s Modern Slavery Act in 2015, France’s Corporate Duty of Vigilance Law and the Netherlands’ Child Labour Due Diligence Law in 2017) and within the institution (the Timber Regulation in 2013 and the Regulation on Conflict Minerals in 2017).

On 29 April 2020, the European Commissioner for Justice, Didier Reynders, announced that the EU was committing to introduce legislation by 2021, requiring businesses to carry out due diligence in relation to the potential human rights and environmental impacts of their operations and supply chains6.

Faced with the fact that the effectiveness of the French duty of care law remains limited because of these questions regarding its scope of application, many expect a clarification from the European text.

The French Corporate Duty of Vigilance law: ambitious but unclear

A poorly developed due diligence mechanism pertaining to the prevention of human rights violations

Unlike the UK’s Modern Slavery Act for instance, which relies on companies’ information and reporting obligation, the DVL is based on a due diligence mechanism and requires companies to establish, publish and implement a vigilance plan.

In that respect, the law clearly defines five mandatory actions, companies must implement as part of their vigilance plan

  • a risk-mapping that identifies, analyses, and ranks risks of serious violations of human rights and fundamental freedom;
  • evaluation procedures that regularly assess, in accordance with the risk-mapping, subsidiaries, subcontractors or suppliers with whom the company maintains an established commercial relationship;
  • appropriate actions to mitigate risks or prevent serious violations;
  • This alert mechanism must be implemented in unison with trade unions organisations represented within the company concerned; and
  • a monitoring scheme assessing the effectiveness of the measures put in place by the company.

In practice, a study which reported on the first published vigilance plans, highlighted that most companies performed or initiated new efforts to identify an at-risk supplier7.

However, it was also underlined in another report that these objectives were only partially met. This report pointed out that ‘the plans are very heterogeneous, which shows that, faced with the novelty of the exercise, each company has applied the law with disparate levels of requirements, with most plans still very much focused on the risks for companies, and not for third parties or the environment’8. In 2019 the findings were similar, with only 15 per cent of the companies presenting a finalised plan9.

According to a recent report by the Conseil Général de l’Economie submitted to the French Ministry of the Economy, this is mainly due to the lack of understanding of the law by the companies: ‘this fog over the Duty of Vigilance pushes companies to be cautious, waiting for the first cases to come before the courts’10. This goes to show that the requirements of the law and for any due diligence model to be successfully implemented must be clearly defined.

Ineffective remedies for violation of the Corporate Duty of Vigilance law

The DVL provides that if a company fails to establish, implement or publish a vigilance plan containing reasonable measures preventing serious human rights or fundamental freedom violations, any party that has standing may send a formal notice to a company to comply with this obligation.

If the company still fails to meet its obligations after the three-month period, the party can file a claim before the French courts and seek an injunction for the company to be ordered to comply with its obligation, under penalty11. Initially, the law also allowed the courts to impose a civil fine of up to 10m euro in case of non-compliance, but this disposition was struck down by the French Constitutional Council on the basis of the principle of legality12. A company can also be sued for any damages arising out of a violation of its obligations to implement a vigilance plan13.

The employers’ union, as well as some French politicians, voiced their concern regarding the DVL insofar as they argued that it could adversely affect the competitiveness of French companies due to these regulations.

In practice, in June 2019, Total became the first company to receive a formal notice for failing to comply with its duty of care regarding climate change and the human and environmental impacts of its subsidiary and its suppliers in Uganda14. This case was the first to be taken to court, in December 2019.

However, on 30 January 2020 the court ruled that it did not have jurisdiction and ordered for the case to be referred before the commercial courts. The appeal hearing, planned for 28 October 2020, will provide the first indications regarding the practical implementation of this law including issues on jurisdiction.

An expected EU-wide mandatory human rights due diligence law

In regards to EU legislation, the announcement of the European Commissioner of Justice came after the publication of two documents: a study on due diligence requirements through the supply chain by the European Commission (hereinafter the ‘Study’) and a briefing on ‘Human Rights Due Diligence Legislative Options for the EU’ (hereinafter the ‘Briefing’) requested by the European Parliament.

A clearly defined mandatory Human Rights Due Diligence (mHRDD) legislation

The Briefing recommendations sketches the outline of a future law and suggests adopting an extended scope regarding to which companies it should apply and the scope of violations that this legislation would cover.

Considering the difficulty in establishing a threshold, and the fact that the risk of violations is not limited to bigger companies, the Briefing underlines the necessity for the mHRDD legislation to cover every company, specifying nevertheless that an adaptation of the regulation – based on a proportionality principle – to the different size of companies and the different scope of supply chains is needed.

In that respect, it recommends including any company which is established within an EU Member State but also any company placing products or providing services on the European market – regardless of their size or sector15. This would create a larger scope than the DVL provides currently, which is limited to effectively very few companies.

Regarding the scope of violations of human rights that would be covered, the Briefing argues for European legislation to be as broad as possible and mentions requirements for the companies ‘to engage actively in analysing, mitigating and remedying any adverse impacts on human rights’16. In this regard, the only difference with the French law would be to explicitly mention the most important human rights violations that would fall under the regulation to avoid the uncertainties of the French law17 that never defines the concept of a ‘serious violation’.

Finally, regarding the business activities covered, the Briefing underlines the necessity to include all business relations in the value chain in order to refrain from creating arbitrary distinctions between companies with different productions schemes or incentives to circumvent due diligence by further outsourcing18.

A limited European Human Rights Due Diligence (mHRDD) legislation when it comes to sanctions

The future European legislation would not aim at determining sanctions but rather at affording discretion to Member States to adopt the suitable implementation mechanisms.

Indeed, although the Commission study underlines that a prescriptive approach may be more likely to secure an EU ‘level playing field’, the Briefing points out that the scope for an EU due diligence law to define criminal sanctions would be limited given the EU’s restricted jurisdiction in this area19.

Thus, it appears likely that future legislation, should it be implemented, would rely on a dual implementation mechanism. The EU would publish guidelines and directives addressing effective enforcement action, and Member States would be responsible for the determination of effective, proportionate and dissuasive penalties for non-compliance by companies with due diligence obligations.

While the exact regulatory mechanisms of a future European law remain vague, the recommendations drawn from the Briefing and the Commission Study allow the identification of areas of reflection for an effective implementation of a mHRDD. Above all, this future regulation suggests a revision of the French DVL, which would be clarified by following the contours of European legislation. A new revolution after the Sapin II law?

Thursday 5 November 2020

Clémentine Duverne, Partner Navacelle Paris
Julie Zorrilla, Partner Navacelle Paris
Laurine Becker, Associate Navacelle Paris

Notes :

Navacelle discusses the specific role of lawyers in the context of internal investigations at the Institut Francais de Prevention de La Fraude.

Clémentine Duverne and Stéphane de Navacelle, Partners Navacelle invited alongside Charles-Stéphane Marchiani by Francis Hounnongandji, to discuss the specific role of the lawyers in the context of internal investigations at the Institut Francais de Prevention de La Fraude.

www.ifpf.fr
November 20 2020

Navacelle discusses best practices for internal investigations to the Healthcare Compliance Implementation Leadership Programme at INSEAD.

Clémentine Duverne et Stéphane de Navacelle, Partners Navacelle invited by Craig Smith to discuss best practices for internal investigations with participants to the Healthcare Compliance Implementation Leadership Programme at INSEAD.

www.insead.edu
November 19 2020

Navacelle and FRA host a Global Influencer Session via IBA 2020 – Virtually Together on “Practical advice to navigating European enforcement & investigation”

Stéphane de Navacelle, Partner Navacelle to discuss “Practical Advice to Navigating European Enforcement and Investigation: a focus on Norway, France & Technology” alongside Yousr Khalil, Greg Mason (Forensic Risk Alliance), Thomas Brandi (Advokatfirmaet Selmer AS) at International Bar Association Annual Meeting on Thursday November 12 – 0315-0415 EST (GMT-5) / 0815-0915 GMT / 1715-1815 JST (GMT+9).

Register here
November 9 2020

DÉCIDEURS Magazine identifies Navacelle as “Unavoidable” – Guide Compliance & Fraud – Compliance & Fraud – Internal and International Investigation in France in 2020.

Navacelle identified by Décideurs as “Unavoidable” in Compliance & Fraud – Internal and International Investigation in France in 2020.

www.magazine-decideurs.com
November 5 2020

Stéphane de Navacelle, Co-chair the Virtual Global Forum on Corporate Criminal Liability 2020 organized by Cambridge Forum.

Stéphane de Navacelle, Partner Navacelle, co-chairs the Virtual Global Forum on Corporate Criminal Liability 2020 organized by Cambridge Forum along with Joanne Rickards, Partner Mishcon de Reya LLP, and Steering Committee Joseph Ashkenazi, Partner Herzog Fox & Neeman, Magomed Gasanov, Partner ALRUD Law Firm, Paula Moreira Indalecio, Partner Mattos Filho Advogados, Shankh Sengupta, Partner Trilegal, Daniel Silver, Partner Clifford Chance US LLP, Melody Wang, Partner Fangda Partners, Sylvia White, Director Adhibeo Limited, Hiroshi Yamauchi, Partner Mori Hamada & Matsumoto

www.cambridgeforums.com
October 29 2020

Webinar International Network of Women Lawyers – RIFAV (Afrique): Compliance and internal investigations

Stéphane de Navacelle and Julie Zorrilla, Partners Navacelle, discuss the Attorney’s role in assisting corporates with rolling out compliance systems to increase financial value and limit risk related to Multilateral Development Banks’ funding at webinar of the International Network of Women Lawyers – Africa.

October 16 2020

Participation in the 13th conference of the Enforcement Committee of the French Autorité des Marchés Financiers

Stéphane de Navacelle, Partner Navacelle, takes part in the 13th conference of the Enforcement Committee of the French Autorité des Marchés Financiers – AMF. He will discuss the impact of the AMF sanctions with Laure de Batz (Sorbonne), Dominique Bourrinet (Société Générale), Benoît de Juvigny (AMF) and Eric Pinon (AFG) chaired by Maxence Delorme (AMF).

Program
October 5 2020

WWL – Thought Leaders Guide – France 2021

Stéphane de Navacelle, partner Navacelle, confirmed as Global Elite Thought Leader in Business Crime Defence and Investigations, by Who’s Who Legal in the Thought Leaders Guide France 2021, 2nd edition, based on independent research with clients and peers.

whoswholegal.com
September 30 2020

Stéphane de Navacelle discusses about sexual abuses inside the French Catholic Church

Stéphane de Navacelle (Navacelle), will discuss as a (www.ciase.fr) Member – French independent commission about sexual abuses inside the French Catholic Church – the following subject: “Release the speech of the victims of sexual abuses within the French Catholic Church” with Sylvette Toche, CIASE secretary general, and Olivia Mons, head of communication for France Victimes Federation.

Join the public and free-access broadcast meeting on Zoom
September 28 2020

Laurine Becker & Stéphane de Navacelle members of the French Heath and solidarity ministry working group on promoting well-treatment and to combat mistreatment

Laurine Becker and Stéphane de Navacelle (Navacelle) members of the steering group of the Working group for promoting well-treatment and to combat mistreatment, chaired by Alice Casagrande under the auspices of the French Ministry for health and solidarity, took part on September 23rd in the debates-workshops of the formalized consensus process for the development of a shared vocabulary concerning abusive situations.

solidarites-sante.gouv.fr
September 25 2020

Contribution to the Lettre des Juristes d’Affaires – professional secrecy today

Stéphane de Navacelle, Partner Navacelle, quoted by Anne Portmann in the Lettre des Juristes d’AffairesFrench Corporate law weekly – about reality of French professional secrecy in lawyer-client communications, alongside Vincent Nioré (Nioré Avocats), François Saint-Pierre (François Saint-Pierre Avocats) and Nicolas Tollet (Hugues Hubbard & Reed LLP).

Addressing privilege issues should take place in the immediate aftermath of dawn raids […] Internal investigations’ purpose is not to identify documents to be destroyed ahead of a dawn raid […] Lawyers still need to be trained as to the goals of an internal investigation.

Read article
September 24 2020

The Legal 500 Paris 2020-2021

Stéphane de Navacelle, Partner Navacelle, recognized among Leading individuals in Compliance by The Legal 500 Paris 2020-2021 (Legalease).

www.legal500.com
September 21 2020

Stéphane de Navacelle appointed to AIJA Extended Bureau & Human Rights Committee co-Chair

Stéphane de Navacelle, Partner Navacelle appointed to AIJA Extended Bureau and AIJA Human Rights Committee alongside Pia Padfield (Simmons & Simmons LLP) and Martijn Burgers (Pact advocaten LLP).

www.aija.org/news
September 16 2020

Paris Bar Bulletin on Internal investigations : « Knowledge without conscience is but the ruin of the soul »

Internal investigations : « Knowledge without conscience is but the ruin of the soul »
It is in diversity and complexity that relying on outside counsel becomes obvious, it is up to us to take up the challenge. Each investigation is unique, lawyers need to keep a jealous watch over their independence, tread carefully in fields with specific rules such as labor law and never forget they are ancillary to Justice. Let us be, rabelaisien !

Stéphane de Navacelle, partner Navacelle former member of Paris Bar Council, regroups Béatrice Brugués-Reix (Dentons), Thomas Baudesson (Clifford Chance Paris) and Edmond-Claude Frety (Frety Avocats) for the Paris Bar Newsletter.

Read article
September 14 2020

The Legal 500 Paris 2020-2021 – Dispute résolution : White Collar Crime

Navacelle recognized by The Legal 500 as one of the top law firms in dispute resolution about White Collar Crime.

www.legal500.com
September 8 2020

Bastille Day Newsletter 2020

Lawyers at Navacelle thought you might be interested in reviewing a selection we made of noticeable events which occurred in France in the fields of corporate criminal liability, criminal procedure, enforcement and compliance over the past 12 months so we put together our fourth Bastille Day Newsletter!

Unfolding in the field in France over the past fortnight would – alone – have warranted half a dozen “client alerts”: an official inquiry into the PNF by the Justice ministry, a shining new Justice Minister who – at best –thinks very little of the PNF and wants to cut short “preliminary” investigations, Judges’ union call the appointment of the Justice Minister by President Macron a “declaration of war”, spying by the PNF on several law firms to determine who may have stopped by, yesterday’s 2019 activity report by the French Anticorruption Agency, etc.

We’ve put some thinking into the following (and much more): are internal investigations still an oddity in the legal community?, Double jeopardy in tax & criminal matters catch 22?, European Public Prosecutor a landmark gone unnoticed?, What is the CJIP going to be extended to next?

Uncertain waters lie ahead, more than ever we are confident that the legal community, our friend here in Europe and around the world, are the cornerstone of “le monde d’après”. Stay safe & in touch!

Special thanks to Laurine Becker, Alice Béral, Princessa Fouda, Sarah Reilly, Clément Allais, Sara Deyhim, Amelle Djedi, Soukaina El-Mekkaoui, Alex Kodiane, Christelle Meda, Ekaterina Oleinikova & Julia Velho.

Best wishes,

Clémentine Duverne, Julie Zorrilla & Stéphane de Navacelle
Partners Navacelle

Read Bastille Day Newsletter
July 14 2020

Editor’s Note

Lawyers at Navacelle thought you might be interested in reviewing a selection we made of noticeable events which occurred in France in the fields of corporate criminal liability, criminal procedure, enforcement and compliance over the past 12 months so we put together our fourth Bastille Day Newsletter!

Unfolding in the field in France over the past fortnight would – alone – have warranted half a dozen “client alerts”: an official inquiry into the PNF by the Justice ministry, a shining new Justice Minister who – at best –thinks very little of the PNF and wants to cut short “preliminary” investigations, Judges’ union call the appointment of the Justice Minister by President Macron a “declaration of war”, spying by the PNF on several law firms to determine who may have stopped by, yesterday’s 2019 activity report by the French Anticorruption Agency, etc.

We’ve put some thinking into the following (and much more): are internal investigations still an oddity in the legal community?, Double jeopardy in tax & criminal matters catch 22?, European Public Prosecutor a landmark gone unnoticed?, What is the CJIP going to be extended to next?

Uncertain waters lie ahead, more than ever we are confident that the legal community, our friends here in Europe and around the world, are the cornerstone of “le monde d’après”. Stay safe & in touch!

Special thanks to Laurine Becker, Alice Béral, Princessa Fouda, Sarah Reilly, Clément Allais, Sara Deyhim, Amelle Djedi, Soukaina El-Mekkaoui, Alex Kodiane, Christelle Meda, Ekaterina Oleinikova & Julia Velho.

Best wishes,

Clémentine Duverne, Julie Zorrilla & Stéphane de Navacelle
Partners Navacelle

The challenges brought to the independence of the French Public Prosecutor’s Office

Recent statements by the former French Financial Prosecutor, Eliane Houlette, before the Parliamentary Board of Inquiry1, has revived the debate on the independence of the French Prosecutor vis-à-vis the executive power.

Indeed, she stated that the independence of French prosecutors, in particular of the French Financial Prosecutor Office (“PNF”), is hampered by a number of obstacles2. Among these, the power of the General Prosecutor’s Office, directly linked to the Minister for Justice, to provide general instructions and to request reports on pending cases from the PNF:

“So, in practical and concrete terms, the feeling of dependency [from the executive power] is something I have experienced within the performance of my duties. […] the problem is that through general instructions and special reports, the General Prosecutor’s Office grants himself a right of oversight over the conduct and policy choices of public prosecutors. […] And this right to oversee is omnipresent. […] The question that we can actually ask ourselves is why does the General Prosecutor’s Office have this right to oversee the public prosecution, through specific cases? How should we understand it? Is he acting for himself or for someone else? 3.

These statements caused quite a stir, namely considering that Eliane Houlette conducted the investigation of the former French prime Minister François Fillon and his wife, who were accused of misappropriation of public assets and that she reported pressure from the General Prosecutor’s Office to provide and communicate information pertaining to this case.

Another former investigative magistrate, Renaud Van Ruymbeke, condemned the lack of independence of the Public Prosecutor’s Office, stating that politicians have never lobbied for it4.

In addition, a few days before his appointment as French Minister of Justice, Eric Dupond Moretti, a French criminal lawyer, filed a complaint against X before the Paris Prosecutor office after having been secretly wiretapped by the PNF during an investigation held in 2014 regarding corruption facts involving the former French President Nicolas Sarkozy5. He finally withdrew his complaint after his appointment and stated that he will campaign for the reform regarding the independence of the justice:

I want to progress on a subject that is close to my heart: the independence of the justice system. I wish to be the Minister of Justice who will finally bring the long-awaited reform of the Public Prosecutor’s Office to a congress6.

French Prosecutor opened an investigation into potential mismanagement during the Covid-19 crisis

In response to many criminal complaints, the Paris Public Prosecutor’s Office launched a criminal investigation regarding the alleged mismanagement of the Covid-19 crisis1.

The investigation will examine the following charges: endangering the lives of others, involuntary homicide, failure to assist those in danger, and willingly abstaining from fighting a threat2.

A number of these complaints have been filed against X. Therefore, it remains up to the prosecutors to assess whether public decision-makers or administrative structures should be prosecuted.

Concurrently, complaints have been lodged against ministers before the Court of Justice of the Republic (“Cour de Justice de la République”), which has sole jurisdiction over ministers’ actions as part of their government duties3. The French President, on account of his presidential immunity, will not be included in the investigation carried out by the court4.

French financial authorities warning on fraud increase in time of Covid-19

The French Securities and Markets Authority (“Autorité des Marchés Financiers”)1 and the French Prudential Control and Resolution Authority (“Autorité de Contrôle Prudentiel et de Résolution”)2 urge the population to be vigilant regarding the risk of fraud amidst the Covid-19 epidemic, namely with respect to fraudulent e-mails and online advertising banners3.

The two regulatory authorities point out that fraudulent solicitations, often exploiting topical events, can escalate rapidly

Transparency International sounds the alarm about the risks of corruption in the face of Covid-19

The Covid-19 pandemic led to a multitude of rushed contracts signed to provide protective and medical equipment, sometimes without carrying out proper due diligence.

As corruption often thrives in times of crisis, a risk of fraudulent schemes and bribery exists. The NGO thus recommends identifying these compliance risks prior to their occurrence, namely considering that the procurement of medicine and supplies in health systems is one of the most vulnerable areas for corruption1.

The French Supreme Court confirms the importance of the French Financial Prosecutor’s Office in the fight against complex and international financial delinquency

On April 1, 2020, the Criminal division of the French Supreme Court (Cour de cassation) ruled that the French Financial Prosecutor’s Office (“PNF”) is competent to prosecute money laundering and misappropriation of public property offenses, even in cases where it does not have jurisdiction to prosecute the initial offense1.

In the present case, an investigation was conducted by the PNF into the use by a former Russian minister and his wife of funds allegedly derived from the misappropriation of Russia’s public funds.

The investigation involved the seizure of a hotel located in France against which an appeal was lodged. The defendant challenged the PNF’s ratione materiae jurisdiction, before the criminal division of the Cour de Cassation, stating that the PNF was only created to ensure “”.

The Court recalled however, that the PNF was established to provide the French judicial organization with a highly specialized public prosecutor, whose jurisdiction would include the most complex cases of economic and financial delinquency. The PNF thereby has jurisdiction to prosecute complex facts, including, inter alia, cross-border cases, with multiple shell companies in countries deemed “tax havens”.

New article 314-1-1 of the Criminal Code introduces the offence of breach of trust for violations of the EU’s financial interests

The decree dated September 18, 20191 added article 314-1-1 to the French Criminal Code, strengthening the breach of trust offence.

The sentence is extended from three to five years of imprisonment2 in cases where the breach “affects [the] revenue received, [the] expenditure incurred or [the] assets belonging to the budget of the European Union, to the budgets of the institutions, bodies, offices and agencies of the European Union or to budgets managed and controlled directly by the latter3”.

Similarly, the sentence increases from a €375,000 to a €750,000 fine and seven years’ imprisonment when the crime is committed in an organized band.

While the attempt and the aggravating circumstance of organized crime are not sanctioned under the common law breach of trust offence, this new article makes explicit that the attempt to commit this specific breach of trust will be sanctioned in the same way as the commission of the offence itself.

These provisions, which reinforce the legislative protection of EU’s financial interest, are in line with the European Directive of July 5, 2017 “on the fight against fraud affecting the financial interests of the European Union by means of criminal law4”.

Although the case law on the breach of trust offence is well established, the first decisions regarding the breach of trust relating to EU financial interests are yet to come. Is awaited with anticipation case law clarifying attempted breach of trust, and the confirmation that the constituent elements are the same as those of the primary offence.

The French Anti-Corruption Authority releases its 2019 activity report

On July 9, 2020, the French Anti-Corruption Authority (“AFA”) published its activity report for year 2019. This report provides the key figures of the initiatives that the AFA has carried out, namely trainings and outreach missions to increase anticorruption awareness among public and private actors. With respect to AFA controls, 36 new controls were carried out in 2019 – including 20 on economic actors and 16 on public actors – and an additional 4 pursuant to CJIPs.

The 2019 activity report also covers the notable developments at the AFA over the past year. It highlights the AFA’s contribution to the international assessments of France and the fight against corruption carried out by the United Nations and GRECO respectively, and to the preparation of the OECD assessment due to take place in 2021. The AFA also attended several roundtables, alongside the UK Serious Fraud Office, the World Bank and the OECD, and was present during the G20 summit.

The AFA elaborates on the phenomenon of corruption and provides indications on the anticorruption mechanisms to be adopted by different-sized companies. It states that while companies are progressing towards implementing effective anticorruption measures – providing the example of a sanctioned company that enhanced its compliance program before the date of the hearing before the AFA Enforcement Committee, thereby voiding the purpose of sanction – there remain issues to overcome, requiring enhanced administrative and judicial cooperation.

French Prosecutors continue to conclude French Deferred Prosecution Agreements

(i) CJIP Google France SARL and Google Ireland Ltd, September 3, 2019. On September 3, 2019, the Financial Prosecution Office (“PNF”) concluded a CJIP with Google France SARL and Google Ireland Limited, which agreed to pay a €500 million fine for tax fraud and complicity of tax fraud1. The fine was then lessened, taking into account the tax penalties set by the tax authorities for 2011-2018 that the company had agreed to pay.

(ii) CJIP Société SAS Egis Avia, December 10, 20192. On December 10, 2019, the PNF concluded a CJIP with the French company SAS Egis Avia, which agreed to pay a €2.6 million fine for the bribery of a foreign public official. SAS Egis Avia had been under investigation since October 2013 for the payment of consultancy fees to companies domiciled in Non-Cooperative Countries and Territories – British Virgin Islands – the investigation highlighting financial flows to Algerian public officials to influence the award of a contract for the construction of an airport terminal in Oran.

(iii) CJIP Bank of China, January 15, 20203. On January 15, 2020, the Paris Public Prosecutor’s Office concluded a CJIP with the Bank of China, which agreed to pay a €3 million fine for profits derived from tax fraud laundering on account that they failed to demonstrate that they had complied with anti-money laundering standards relating to customer identification and transaction due diligence. Accounts opened in a Bank of China branch located in the province of Zhejiang, were used to receive funds under false invoices and process cash inflows from the sale of smuggled goods. The modus operandi enabled Chinese account holders residing in France to circumvent corporate tax and VAT for a significant part of their turnover.

(iv) CJIP Airbus SE, January 31, 20204. On January 29, 2020, the PNF concluded a CJIP with Airbus SE, which agreed to pay a €2.083 billion fine for the bribery of public officials. The investigations demonstrated that Airbus hired and paid numerous commercial intermediaries up until 2015. Part of their fees was paid by several occult means, including fictitious loans, without establishing the exact nature of their contribution. This CJIP was signed in coordination with the UK Serious Fraud Office and the US Department of Justice, with which Airbus SE has concluded separate Deferred Prosecution Agreements. Airbus SE also commits to complying with the French Anti-Corruption Agency (“AFA”) controls for a period of three years, to ensure that the compliance program upon which they have agreed has been fully deployed in the company’s entities and subsidiaries.

(v) CJIP Swiru Holding May 4, 20205. On May 4, 2020, the Public Prosecutor’s Office of Nice concluded a CJIP with the Swiss company Swiru Holding AG. The latter agreed to pay a €1.4 million fine, in addition to a separate payment of €10.4 million to the tax administration for tax evasion. The company was indicted in November 2019 for complicity of tax fraud after the investigation revealed concealment of part of the sale price of a villa located in South of France to avoid paying tax on the differential price. The Public Prosecutor’s Office of Nice is the fourth authority that has signed a CJIP, following the PNF, and the Public Prosecutor’s Office of Paris and Nanterre, therefore contributing to a wider use of this transactional tool in France.

The French administrative Supreme Court recalls the limits of the employer‘s internal investigation powers vis-à-vis employees

Although internal investigations have become common practice in France, there is no dedicated and special legal framework of the employees’ rights during such investigations. The employee’s rights during internal investigation are thus regularly stems from case-law.

The decision issued by the French Council of State (Conseil d’Etat) on 2 March 2020 illustrates the necessity to balance the company’s interest and the employee’s right to privacy during an internal investigation1.

According to the Conseil d’Etat, investigative measures carried out by an employer against its employee must be necessary and proportionate for the gathering of the evidence related to the allegation and should not unduly infringe the employee’s right to privacy.

I. Summary of facts

In the present case, a Bank launched an internal investigation against one of its employees after a customer reported being threatened by this employee due to alleged suspicious transactions in the customer’s bank accounts.

In order to shed light on the allegations, the employer carried out investigative measures focused on whether the employee had consulted the bank accounts of the customer. However, during the investigation, the Bank accessed its employee’s private bank accounts as well as those of the union of which he was treasurer. The investigation revealed that the employee had embezzled funds to the detriment of the union.

Considering that the embezzlement caused an undeniable disturbance in the business operations of the company, the Bank decided to dismiss its employee. As the employee was a member of a trade union, the employer needed the authorization of the labor inspector to dismiss him. This authorization has not been granted however and the employer has thus seized the French Labor Ministry who conversely considered that the embezzlement of funds justified the dismissal.

After several years of proceedings before French courts, the Conseil d’Etat ruled that the dismissal was not valid and recalls that the investigation measures carried out against an employee must be justified and proportionate to the facts that gave rise to the investigation and shall not affect the employee’s right to privacy.

II. The acts of investigation must be proportionated to the aim of the investigation: the balance between the right to evidence and employee’s rights to privacy

In the case at hand, the Conseil d’Etat reaffirms that the employer has no right to use investigative measures that would violate its employees’ fundamentals rights2, such as the employee’s right to privacy under Article 9 of the French Civil Code3 and Article 8 of the European Convention of the Human Rights4.

This decision is in line with well-established case law. Thus, in a decision of 20 November 1991, the Civil and Criminal Supreme Court (Cour de cassation) held that “while the employer has the right to control and monitor the activities of his employees during working hours, any recording, for whatever reason, of images or words without their knowledge constitutes an unlawful means of evidence5. Similarly, French administrative courts have had previous occasions to sanction the use of unlawful means of evidence by an employer6.

It should be stressed that the Conseil d’Etat condemns this infringement only because the investigative measure taken – access to the employee’s bank account – was not necessary and proportionate to establish the materiality of the allegations for which the investigation was launched. The employee was thus dismissed for reasons unrelated to the customer’s complaint.

Hence, it remains questionable whether the employer would have had the right to access the employee’s bank account if the complaint was specifically related to the embezzlement. Indeed, the right to privacy remains an essential right protected by the French courts French courts asserted that “while the employer may always have access to files that have not been identified as personal by the employee, it cannot use them to sanction him if they are part of his private life7 and specified that “the right to evidence can only justify the disclosure of material that violates privacy if it is essential to the exercise of that right and if the violation is proportionate to the aim pursued8. In each case, it is essential to balance the employee’s right to privacy and the employer’s right to evidence.

This question must also be considered in the light of the European General Data Protection Regulation9 and the recent French Data Protection Authority (“CNIL”) guidelines on professional alert10 recall that a data collection of personal data within an internal investigation requires the consent of the person subject to the data collection11.

It remains therefore unanswered whether an analysis of personal data which is necessary to establish the materiality of the allegations but is collected without the employee’s consent could be considered as a proportionate investigate measure and not a breach of the right to privacy.

In this context, the importance of a well-established internal investigation framework with good practices, including a clear definition of the investigations’ scope must be reaffirmed.

French Court approves dismissal of an employee for breach of company anticorruption policy

A company operating as spare-part supplier for the aircraft industry, dismissed its sales assistant after an internal investigation revealed that she had accepted and ordered two iPads from one of the company suppliers, violating the company’s internal anticorruption policy.

While the lower court ruled against the dismissal, Anger’s Court of Appeal followed the employer’s reasoning, considering that “by personally accepting gifts of a significant amount from a supplier, twice and with an absolute discretion”, the employee had committed gross misconduct that justified her dismissal1.

With this decision, the Court took a stance in favor of companies that adopt a strict interpretation of anticorruption policy and sent a strong message to employees who put their employer at risk. The Court operates a sort of balance of interests by supporting companies’ internal anticorruption policies, although the company was not subject to anticorruption law standards.

I. A willful breach of internal anticorruption rules constitutes gross misconduct justifying dismissal

Pursuant to French labor law, employees cannot be dismissed without reason2 and a minima, must be found guilty of substantiated misconduct. In the present case, the Court recalled that “gross misconduct results from a fact or set of facts committed by the employee involving a violation of the obligations deriving from [the employee’s] employment contract and of such importance as to make it impossible for [the employee] to remain in the company”.

Here, the identified misconduct is the result of cumulated circumstances. The employee was guilty of having breaching company internal anticorruption and ethical policy, by personally ordering two Ipads without consulting management and asking for them to be delivered at her personal residence.

Moreover, the Court highlighted that she willingly denied and withheld the order, all the while being aware of the company’s internal policy, as she had participated in several company trainings on ethics and anticorruption and had been provided with documents that expressly specified anticorruption provisions regarding gifts. According to these rules, accepting gifts was prohibited, except for gifts of a “reasonable value”, capped at twenty euros – while the iPads amounted to 798 euros. The internal investigation carried out by the company revealed, that the employee had issued a similar order with the same supplier two years earlier, for an electronic pad.

Although no act of corruption was identified – as not the role of the labor judge – this decision is an indication of the willingness to support company efforts to prevent litigious behavior on the part of their employees.

II. A decision in line with French anticorruption provisions

Pursuant to Article 17 of the Sapin II law, only companies with over five hundred employees are required to implement an anti-corruption policy3, including a code of conduct, an internal reporting procedure, an internal control procedure, risk mapping and trainings.

Here, while the company is under the threshold imposed by law4, it voluntary chose to implement an internal anticorruption and ethics policy. This shows that anticorruption is increasingly considered as important by small economic actors, namely on account of the serious consequences uncovered corruptive schemes may have (e.g. financial, reputational, and potential prosecution).

Although the risks of corruption are the mere backdrop of this case, the gross misconduct is characterized by the risks for the company. By dismissing its employee, the company chose to avoid such risks.

The French Supreme Court confirms its position on the presumption of money laundering

In a decision of 18 December 2019, the French Supreme Court (“Cour de cassation”) clarified the contours of the presumption of money laundering, which was established by the law of December 6, 20131 to fight money laundering more effectively.

During a custom check, a man driving a car registered in Slovenia and travelling in the direction Spain-France was questioned about the contents of his vehicle. While he claimed not to be carrying more than 10,000 euros in cash, almost 30,000 euros hidden in the car were found.

He was sued and convicted for transferring money without a customs declaration and money-laundering. The lower Court and the Court of Appeal applied the presumption of unlawful origin of the funds stated in Article 324-1-1 of the Criminal Code, according to which “the property or income is presumed to be the direct or indirect proceeds of a crime or offence if the material, legal or financial conditions of the investment, concealment or conversion operation have no other justification than to conceal the origin or beneficial owner of such property or income”. The judges considered in particular that the defendant, whose statements have changed several times, did not provide a credible justification of the origin of the funds to rebut this presumption. The Court therefore considered that the material conditions of the transaction have no other explanation than to conceal the origin or the beneficial owner of the sums discovered.

In a decision of December 18, 2019, the criminal division of the Cour de cassation validated this analysis2. The judges emphasized that maneuvers used by the defendant could be interpreted as an intention to conceal the origin or beneficiary of the cash discovered. The Court, making an extensive interpretation of the presumption of Article 324-1-1 of the Criminal Code, also recalled that it is unnecessary to identify or to characterize the initial crime or offense that gave rise to the money laundering operation.

I. The unnecessary characterization of an original crime or offence

The defendant reproached the Courts not to have identified and characterized the original offence. It is however well known that the subsequent offence of money laundering is independent of the original offence. Indeed, the presumption set up by Article 324-1-1 only requires establishing a specific operation such as investment, concealment or conversion.

Hence, according to the Cour de cassation, a mere characterization of the components of money-laundering is sufficient to establish the offence, regardless of the absence of constituting facts required for the prosecution of the original offence3. The provision of Article 324-1-1 thus allows to limit the investigations and focus on combating money laundering rather than on the sanction of the original offence4.

In another recent decision, the criminal division held the same reasoning, specifying that it is not important that “the perpetrators of [original] offences are not known and that the circumstances of the commission of the offences have not been fully determined” in order to establish an offence of money laundering and tax fraud5. The commented decision thus confirms the position of the criminal division of the French Supreme Court, which already had the occasion to apply a presumption on similar cases implicating hidden cash transfer from a country to another6.

II. The necessity of a credible justification of origins of the funds to reverse the burden of proof

In the present case, the Court recalls that the defendant must prove otherwise to reverse the presumption of the illicit origin of the funds. The burden of such proof therefore lies on the defense and not on the prosecution. In this matter, the defendant who claimed that the funds had a lawful origin, produced various outdated documents, related to a real estate sale. The Court noting inconsistencies in the defendant’s statement, concluded that “the material conditions of the transaction have no justification other than to conceal the origin or the beneficial owner of the sums discovered”.

According to the French public prosecutor J. Goldszlagier, the presumption is more than a mean of evidence. Indeed, in this decision the criminal division of the Court applies the presumption of Article 324-1-1 to support the generic illegality of the proceeds of the offence7.

III. An extensive interpretation of the presumption that could be tempered

The Courts justify the application of this presumption in view of the difficulty of proving money laundering operations in the context of very complex and obscure schemes.

The solution is however viewed as severe by some commentators8, especially, as in the present case, with regard to an operation of concealment. The concealment of large sums could in fact be explained by the intention to avoid making a customs declaration concerning these funds. Thus, a failure to comply with the various reporting obligations in customs or tax matters may at the same time be considered as a concealment within the meaning of Article 324-1-1. The presumption of Article 324-1-1 could thus potentially transform any concealment into money laundering if the person questioned of the origin of the funds is unable to demonstrate otherwise.

Lesson drawn from the two first decisions of the Enforcement Committee of the French Anti-corruption Agency

The Enforcement Committee of the French Anti-Corruption Agency (“AFA”)1 issued its first decisions on July 4, 20192 and on February 7, 20203. In both cases, the decision followed a control carried out by the AFA regarding the existence of breaches of the compliance mechanisms provided for in Article 17 of the law Sapin II4. Although no financial sanctions were pronounced, both decisions clarify the AFA Enforcement Committee’s expectations of companies’ compliance program.

I. Decisions reflecting the rigorous stance of the French regulator

With respect to Sonepar – a company specialized in electrical equipment distribution –, the AFA’s Director considered that the company risk mapping was too standardized, the code of conduct was irrelevant regarding the risks that should have been identified, third-party evaluation procedures did not comply with legal requirements and were missing internal control and evaluation processes and an efficient accounting control procedure ensuring that accounts were not used for corruption or influence-peddling purposes. With respect to Imerys – a company specialized in the extraction and processing of minerals – the AFA’s Director considered that its risk assessment methodology did not guarantee satisfactory risk identification, that its risk mapping was incomplete and were missing the absence of an appropriate code of conduct and accounting control procedures.

In both decisions, taking up point by point the grievances formulated by the AFA’s Director, the Enforcement Committee assessed the compliance obligations in the light of the legislative provisions.

By the hearing, Sonepar had demonstrated that its risk mapping was being improved, that it had adapted its code of conduct, incorporated new control procedures into its internal control charter and had developed managing tools for relations with third parties and intermediaries. Since the violations were no longer established at the day of the hearing, the Enforcement Committee rejected all grievances raised by the AFA’s Director, and chose not to sanction Sonepar in the absence of serious breaches of the legislative provisions5. As for Imerys, the Enforcement Committee requested it to adjust its code of conduct and accounting procedures within a specific time-frame. Neither of the companies was sanctioned financially.

II. Specifications regarding the non-binding nature of AFA recommendations and the burden of proof in proceedings opposing the AFA and companies

Both decisions raised interesting points, notably regarding the nature of AFA recommendations, that could be used as potential guidance for companies and AFA controls in the future.

In the Sonepar decision, the Enforcement Committee stated that Sonepar, which was not required to follow the methodology recommended in the AFA recommendations, must be considered as justifying the relevance, quality and effectiveness at the level of the risk mapping that it is responsible for setting up.

In the Imerys decision, the Enforcement Committee did not approve the AFA’s reasoning regarding risk mapping, which requires companies to include a roadmap in their risk mapping, as well as detain a specific and standardized methodology. The Enforcement Committee rejected this argument, on account of the fact that the AFA’s recommendations are only a frame of reference and are thus not binding for companies.

This demonstrates that only breaches provided for by law might be sanctioned and that companies are free to choose their own risk mapping methodology as long as it meets the legislative requirements6.

Furthermore, the Enforcement Committee distinguished two situations regarding the burden of proof. If a company states to have strictly complied with the AFA’s recommendations, it is presumed to satisfy anticorruption law requirements and the burden of proof lies with the AFA’s Director, who will have “to demonstrate that the company did not, in fact, followed such recommendations”. If a company alleges to have partially satisfied the AFA’s recommendations, it must “demonstrate the relevance, the quality and the effectiveness” of its anticorruption system7.

These decisions thereby establish that the standard of assessment is that which is set by law and not by AFA recommendations. This being said, AFA recommendations remain an advantageous framework for companies who choose to comply with them.

French Supreme court ruled that the non-compliance with anticorruption provisions could enable co-contractor to terminate established business relations

On November 20, 2019, the French Supreme Court (Cour de cassation) ruled that failing to comply with anticorruption provisions included in a contract is a valid ground for terminating a long-established business relationship. The dismissed contractor in breach of compliance requirements is not entitled to claim damages based on the abrupt termination of an established business relationship.

This is the first decision rendered on the topic. This verdict emphasized that the French Supreme Court considered that “compliance law” have become unavoidable.

I. The French Supreme Court ruled that a breach of anticorruption compliance and a failure to declare its interests is sufficient to characterize a misconduct enabling to terminate a contractual relationship

A French company specialized in the marketing of medical devices (“EIC”) signed a business agency contract in 2007 with the French subsidiary of the U.S company Biomet, Zimmer Biomet France (“Biomet”).

Under the terms of this contract, EIC “undertook to carry out its activities in compliance with the applicable rules, and in particular acknowledged that it had been informed of the provisions of the former Article L. 4113-6 of the Public Health Code and acknowledged that he had to comply with them”. The company also undertook to subscribe to the Biomet Group’s global anti-corruption policy providing that “all Biomet collaborators will be required to sign a certification of their adherence to the Policy on a regular basis, as well as to satisfactorily participate in training on applicable anti-corruption legislation1.

After EIC refusal to renew his adherence and certification to Biomet anti-corruption policy and the failure to declare its links of interests, Biomet terminated the contract without prior notice due to a serious breach of EIC’s contractual compliance obligations. EIC then sued Biomet in front of the French courts for abrupt termination of an established commercial relationship pursuant to article L 442-6 I 5° of the French Commercial Code2.

For the first time, the French Supreme Court ruled that a breach of anticorruption compliance rules is a valid ground for to terminating a commercial contract for misconduct.

More specifically, the French Supreme Court endorsed the judges of appeal considering that “taking into account the rules set out in the compliance program and the agreement concluded, the failure of [EIC] to comply with its contractual obligations, in that it was likely to result in Biomet’s own liability, was sufficiently serious to justify the termination of the commercial relationship without notice3.

II. French Supreme Court stance for compliance law

The decision emphasized that the French Supreme Court considered that a company may engage its liability for its business partners failure to comply with anticorruption compliance requirements.

In the case at hand, it is relevant to note that the defendant company signed a Deferred Prosecution Agreement (“DPA”) with the US Department of Justice and the Securities and Exchange Commission in 2012 for corruption of public officials. Under this DPA, Biomet agreed to pay a 17 million dollars fine and to strengthen its anticorruption compliance program under a monitorship. The enhancement of the anticorruption compliance program included relationships with third parties, namely business partners. In this context, the non-compliance of its contractor with its anticorruption requirements exposed Biomet to a sanction and a criminal risk.

In addition, IEC failure to declare its interests took place in the context of increased transparency requirements with French anti-gift rules and public health scandals.

In line with the Sapin II law requirements4 and the French Anti-corruption Agency (“AFA”) guidelines5 in terms of control over third parties before entering into/during a business relationship, this ruling sends thus a strong message to French businesses : they must maintain a high level of requirements in terms of internal control and third-party controls with respect to the compliance policies. Moreover, and in accordance with the recent publishing of the political procedure circular on the fight against international corruption6 by French Minister of Justice Nicole Belloubet, the companies must be involved in the fight against corruption and its implementing mechanisms7.

Key takeaways from the past year’s CJIPs

Since the entry into force of the Sapin II law, ten Conventions Judiciaires d’Intérêt Public

I. The Airbus CJIP paves the way for increasinly collaborative transactional justice

On January 31, 2020, the Tribunal of Paris approved the CJIP between the European company Airbus and the PNF, for corruption of public officials. Airbus agreed to pay a fine of 2,083,137,455 euros. This amount is part of a total fine of 3.6 billion euros shared with the US Department of Justice (“DOJ”) and the British Serious Fraud Office (“SFO”) 1. This CJIP is coupled with a three years compliance monitoring carried out by the French Anti-Corruption Agency (“AFA”). It was clarified by the AFA however, that the Airbus compliance program had been completed and its deployment was being monitored.

The multi-jurisdictional investigation relating to Airbus led to investigative measures in over twenty countries2 and was carried out in large part by a joint PNF/SFO team. The investigation revealed that repeated illegal and non-compliant practices were implemented by commercial intermediaries hired by Airbus to negotiate with governmental and private customers and obtain new contracts. Financial and in-kind incentives were offered or provided to foreign airline executives and public officials, through the entity which oversaw the group business development activities called Airbus Strategy and Marketing Organization (“SMO”).

The National Financial Prosecutor, Jean-François Bohnert, described this CJIP as “an exceptional moment […], because it is the result of exceptional proceedings”. Indeed, the extraordinary nature of these proceedings can be explained by several factors:

First, the novelty and exemplary nature of Airbus’ cooperation. Airbus decided to fully cooperate with the authorities and disclosed many documents and elements from its internal investigation. Deputy Financial Prosecutor, Eric Russo, referred to a relationship of trust between the investigators and Airbus’ lawyers, while specifying that “trust does not mean complacency”. While this does not mean that the PNF acted as the company’s lawyer nor that the company lawyers undertook the role of the prosecutors, all parties acted willingly to work constructively and compromise. Airbus’ efforts have been rewarded by its foreseen penalty being cut in half. This will be likely to encourage greater cooperation from future companies.

Secondly, the content of the investigation. Three and a half years of investigating, with 30 million documents to be analyzed, some 40 former executives and employees interviewed by the OCLCIFF, many raids including at former Airbus executives’ residences and requests for mutual assistance in Switzerland, Lebanon, and Latvia, was an extremely costly procedure.

Thirdly, the role of the PNF and the AFA along with the DOJ and the SFO. The appointment of monitors raised a question of sovereignty and protection of the France’s economic interest, on account of the risk of transmitting sensitive information. The DOJ and SFO agreed to waive the designation of their own monitor in favor of the AFA, that is to monitor the deployment of the compliance program. It confirms that “France has both the knowledge and the ability” to do so.

This first experience of full cooperation was significant also because of the tripartite collaboration between the company, investigators and magistrates as the internal investigation was led in cooperation with the authorities, as well as the coordinated action of three prosecuting authorities.

This CJIP which took place on the sixth anniversary of the PNF, is a major step forward for collaborative justice. It enables the French justice system to recover its full powers. This is illustrated by the preponderant place of the PNF in the investigation and the allocation of more than two thirds of the fine to the French state. It also marks the international recognition of French jurisdiction in matters of economic and financial delinquency and paves the way for multi-jurisdictional resolutions.

II. The Google CJIP is a sign of the fight against tax fraud

On September 3, 2019, Google’s French and Irish subsidiaries concluded a CJIP with the PNF on charges of tax fraud and complicity of tax fraud3. This is the second CJIP in relation to tax fraud since the law of 23 October 2018 extended this mechanism to this offense4. Google, which was already sued in several countries and had to conclude several hundred million euro agreements with the tax authorities of the United Kingdom and Italy, agreed to pay a public interest fine of 500 million euros in return for the termination of criminal proceedings5.

The dispute started after allegations from the French tax authorities stated that Google France, a subsidiary of the US company Google LLC, was a French permanent establishment of the European headquarters Google Ireland Ltd, based in Ireland. Google France considered a contrario that all its activities were carried out from Ireland, where income tax is much lower than in France.

Google won the case before the Paris Administrative Court in July 2017 and before the Paris Administrative Court of Appeal in April 20196. These decisions did not recognize the existence of a permanent establishment in France and reversed the corporate tax reassessment for the period 2005-2010. The Ministry of Action and Public Finance then brought the case before the French Administrative Supreme Court (Conseil d’État).

As a matter of caution, Google chose a negotiated approach and concluded a CJIP.

This CJIP was jointly negotiated by Google, the PNF and the tax authorities, which extinguished both the legal proceedings and the tax disputes from 2005 to 2018, opened in France against Google. In addition to the 500 million euros fine, 465 million euros were thereby paid to the tax authorities and closed the procedure for the company’s tax reassessment.

This amount has been determined in compliance with the proportionality principle set by the French Constitutional Council () with respect to the combination of criminal fines with tax sanctions7. Indeed, the CJIP recalls the rule according to which “the combination of criminal and tax penalties is permitted where the total amount of any penalties applied does not exceed the highest amount of one of the penalties incurred8.”

This agreement between Google and the PNF owes much to the political context of taxation of multinationals and the French willingness to respond to the imperative of tax fairness. For that matter, even though Google’s permanent establishment in France has yet to be recognized, the digital giant will be subject from now on to a new tax on its digital services, the GAFA tax9.

Ne bis in idem: France stays on the sidelines of the European stance on the cumulation of criminal and fiscal sanctions after last decisions rendered by the French Supreme Court

Pursuant to the principle ne bis in idem, set out in Article 4 of Additional Protocol n° 7 of the European Convention on Human Rights, no one can be criminally judged, prosecuted, or charged twice for the same facts. European Court of Human Rights1 and Court of Justice of the European Union2 applied this principle to exclude the cumulation of tax and criminal penalties.

In recent years, this cumulation of criminal and fiscal sanctions has been a subject of significant litigation before the French courts.

Since 2016, the French Constitutional Council (Conseil constitutionnel) has approved the principle of cumulation of criminal and fiscal sanctions for the most serious cases of tax fraud. It sets out however some reservations regarding the cumulation. For the first time, the French Supreme Court (Cour de Cassation), in six rulings dated on September 11, 20193 and October 23, 2019 4, has had the occasion to clarify these reservations.

The Court has, nonetheless, reasserted that the principle ne bis in idem does not apply systematically to the cumulation of criminal and fiscal sanctions and decided that these reservations were not applicable to the cases in hand. France stays thus on the sidelines of the European stance.

I. The French Supreme Court states that the criminal judge can order a stay of proceedings only when the proceedings pending before the tax judge constitutes a serious risk of conflict between tax and criminal decisions

One of the reservations expressed by the French Constitutional Council is that the principle of necessity of offences prohibits a taxpayer who has been relieved from taxation by a final court decision on substantive grounds from being convicted of tax fraud 5. This reservation led to the question of the obligation from the criminal judge to stay the proceedings until a final decision of the tax judge.

In one of the September 11th’s decisions 6, the company and its director were found liable by the administrative Court of tax evasion (related to declaratory deductions for VAT and abusive refunds of research tax credits), and were sentenced to pay the said eluded taxes and the penalties resulting from this breach. The defendant appealed the decision and requested the criminal judge to order a stay of the criminal proceedings based on this ground.

The Criminal Chamber of the Supreme Court ruled that the criminal judge should only order a stay of proceedings in the event of proceedings pending before the tax judge if there is a “serious risk” of conflict between the decision of the tax judge and the decision of the criminal judge. In other words, a criminal sentence can be imposed even though the accused could ultimately be discharged from the disputed taxes. In the present case, there was, however, no indication of possible contradiction between the rulings of criminal and tax judges, as the lower tax court decision (subject of appeal) did not discharge the defendant from taxation on substantive grounds in the first place.

II. The French Supreme Court limits the application of the principle of proportionality to sanctions of the same nature and specifies the nature of the solidarity penalty

According to the French Constitutional Council, when two proceedings lead to a cumulation of penalties, the total amount of penalties imposed should not exceed the higher amount of one of the penalties incurred 7.

This rule, known as the principle of proportionality, only applies to sanctions “of the same nature”. Hence, a question arises with respect to the application of the principle in case of cumulation of penalties of different nature, such as fines, tax increases, confiscation measures, ineligibility or imprisonment. Since only monetary sanctions can be compared, the judge making the last decision must carry out a comparison of the criminal and fiscal monetary penalties incurred in order to determine the ceiling’s highest amount. 8

Regarding the monetary sanctions, the Court had to clarify the legal nature of solidarity in the October 23rd 2019 decision 9. In this case, the company’s director was jointly and severally sentenced with the company for the payment of the fraudulent taxes, increases and related penalties. The Court considered that “the fiscal solidarity stated in Article 1745 of the General Tax Code, which constitutes a guarantee for the recovery of the debt of the Public Treasury, does not constitute a penalty in the meaning of Article 8 of the Declaration of 1789”, so that the principle of proportionality is not applicable10. This position confirms that solidarity is not punitive in nature as “anyone who has paid the amount of evaded taxes and related penalties in place of the debtor, has a recourse action against the principal debtor, and, where applicable, against co-debtors jointly and severally liable11.

III. The French Supreme Court clarifies what are the “most serious cases of fraudulent concealment of sums subject to tax” 12 where cumulation of penalties can apply

The seriousness of the fraud may result from the amount of duties defrauded or the conduct of the person prosecuted 13. The various rulings of the French Supreme Court have shown that elements such as the use of intermediaries established abroad, the existence of concealment maneuvers or the amount of duties can be taken into account in assessing the seriousness 14. For instance, the Court held in one of the September 11th’s decisions 15, that the seriousness of the fraud arose from the use by the defendant of accounts opened in Switzerland for fictional companies registered in tax heavens, and the amount of duties evaded which amounted to 235,580 euros.

IV. The French Supreme Court confirms the application of the reservation issued by France to the Article 4 of the Additional Protocol n° 7 of the European Convention on Human Rights to reject the application of ne bis in idem principle

France accompanied the ratification of the Article 4 of Additional Protocol n°7 of the European Convention on Human Rights with a reservation which restricts the application of ne bis in idem to criminal courts’ decisions and criminal offences 16.

The French Supreme Court affirms in these decisions that the criminal judges have to apply this reservation confirming the specificity of France in the application of ne bis in idem principle. The ECtHR has invalidated the reservations made by several other EU countries, but France reservation is indeed still valid 17. Until otherwise decided, French courts shall thus apply the reservation made to ne bis in idem principle and give it full effect 18.

It is however interesting to note that the commentators expect the ECtHR to decide on the validity of the reservation issued by France in the foreseeable future 19 and to potentially undermine the current position of the French Supreme Court.

The French Data Protection Authority releases guidelines on whistleblower reports

The French Data Protection Authority (“CNIL”) published new guidelines on December 10, 2019 to help companies to comply with GDPR1 requirements when implementing internal alert systems2.

In France, the setting up of an internal reporting system is mandatory since the Sapin II law for companies over fifty employees3. It has been expanded with the duty of vigilance law4, and many large companies go beyond their legal obligations to meet international expectations in terms of compliance by providing compliance reporting systems for violations of the code of conduct and internal rules.

After the entry into force of the GDPR, the reporting system through the authorization AU-004 was no longer adequate5. On July 18, 2019, the CNIL thereby decided to adopt guidelines for private or public organizations to implement a system for collecting and managing professional alerts requiring the processing of personal data6.

These Guidelines, based on a public consultation, update and strengthen the CNIL’s expectation on professional alerts, by integrating the changes linked to the implementation of the GDPR in France and the modification of the law on Data Processing and Individual Liberties adopted in 19787.

Compliance with these Guidelines enables organizations to ensure that data processing implemented in the context of alert systems complies with data protection principles.

I. A pragmatic reminder of the GDPR principles with respect to the alert data processing

The Guidelines stress the fundamentals principles that should apply governing the collection of personal data following a professional alert, by outlining the steps in processing an alert.

The purpose of the GDPR is to guarantee a high-level protection for the persons subject to the processing of their personal data and to increase the accountability of those involved in such processing.

First, the data processing must thus fulfil a specific purpose and be justified regarding the entity’s missions and activities8.

It is also up to the data controller to identify the legal grounds of the processing prior to any processing operation9. Regarding internal alert system, it involves complying with a legal obligation imposing the implementation of such a system (i.e. Articles 8 and 17 of the Sapin II law10 and Article 1 of Duty of vigilance law11). The controller is also required to select the relevant and necessary information regarding the purpose of the processing operation12.The conditions for the receipt of personal data are also specified. The Guidelines provide that only the authorized persons shall have access to the personal data13.

The time-frame for which data storage can be kept, warrants clarification. The CNIL, recalling the GDPR provisions, merely indicates that when no follow-up is given to the alert, the data must be destroyed. Anonymous data on the other hand, may be kept for an unlimited period14. In the other cases, the situation would need to be appreciated on a case-by-case basis.

II. The guarantee of individual rights and its limitations

The Guidelines also contain recommendations relating to information, the rights of individuals, as well as a list of security measures applicable to an information system. The controller shall then give information about the processing to the person concerned. More specifically, the Guidelines provide that the person subject to the alert must be informed within a month following the alert15.The right to be informed might be difficult to implement. There is an exception however and the information can be postponed when it is likely to compromise the objective of the alert (i.e. the destruction of evidence) 16.

While the European Directive on whistleblowers leaves the choice to Member States to accept anonymous reports17, the CNIL recommends that companies do not encourage reporters to remain anonymous18. In any event, information that is likely to reveal the identity of the reporter cannot be disclosed without the consent of the person concerned, except to the judicial authority19.

The processing of report data however involves some restrictions on the rights of individuals. For instance, the right to object may be overruled by the company, either by invoking legal obligations or by invoking the exceptions of legitimate and compelling reasons for the processing, which override the interests and the rights and freedoms of the subject of the data, or for the establishment, exercise or defense of legal claims. Companies will therefore have to ensure that any objection request is carefully examined to assess its receivability.

A major role for the AFA in the Anti-Corruption Authorities’ global mapping?

The fight against corruption has spread worldwide, resulting in the establishment of a large number of anti-corruption institutions. The diversity of their strategies and the general lack of up-to-date information prompted the French Anti-Corruption Agency (“AFA”), in partnership with Council of Europe’s Group of States against Corruption (“GRECO”), the Organization for Economic Co-operation and Development (“OECD”), and the Network of Corruption Prevention Authorities (“NCPA”) to launch a global mapping of these national anti-corruption authorities (“ACAs”).

A first analysis report was published on 14 May 2020 and announces a framework for effective cooperation of Anti-Corruption Agencies around the world, the responsibility of which falls under the responsibility of the NCPA chaired by the AFA1.

I. An international taskforce launched to identify areas of collaboration between ACAs

Before the creation of this international taskforce, previous attempts to gather information and to connect these institutions have been already undertaken.

In 2010, the World Bank, in cooperation with the European Commission, the United Nation Office of Drugs and Crime and the US State Department, created a virtual platform, the “Anti-Corruption Authorities Initiative”, in order to provide the staff, practitioners of the ACAs and international actors with the opportunity to connect and learn about each other’s experiences. The first step of this initiative was to establish a diagnostic survey that collected factual and structural information on each participating Anti-Corruption Authority2. Since 2010, 60 countries have submitted their surveys, the last one being Botswana in 20153.

The second effort was the “Network for Integrity initiative” created by several institutions that have decided to join in order to develop an international culture of integrity and to facilitate the exchange of information and best practices among members. To date, the ‘Network for Integrity’ includes 14 institutions from 14 different countries on 4 continents4. Although the council of Europe lists the European national Anti-Corruption Authorities in Europe, no further information is disclosed however5.

Therefore, before the creation of the above-mentioned taskforce, no comprehensive source of information on ACAs was available.

To remedy the lack of cooperation between ACAs at the operational level and in view of the failures of the previous initiatives, the AFA, the Italian National Anti-Corruption Authority and the Serbian Anti-Corruption Agency decided to launch the NCPA6. The GRECO and the OECD then came to strengthen the forces to create the aforementioned ACAs’ global mapping. The project finally involved 171 national authorities committed to the fight against corruption from 114 countries7.

The purpose is to gather information to understand ACAs’ specific needs and to identify areas of collaboration between ACAs. Charles Duchaine, AFA’s Director and 2020 President of the NCPA Network, states that “[b]y learning from each other’s experience and joining our efforts, our goal is to prevent corruption more effectively, and to promote a global culture of integrity8.

II. The outcome of the global mapping reveals common trends and an urge to develop an international network of Anti-Corruption Agencies

The first phase of the mapping was an online survey focusing on the missions and prerogatives of anti-corruption bodies sent worldwide9. The findings indicate that ACAs share similar prerogatives around the world. Indeed, a clear majority of the ACAs oversee the implementation of anti-corruption policies within their countries and are usually in charge of translating international standards into national actions. Besides, ACAs provides a comprehensive assessment of a state’s compliance situation regarding international standards. However, it appeared that the supervisory role differs from one ACA to another. Indeed, only 63% of these institutions are authorized to conduct investigations and/or criminal proceedings and only less than half of the latter have sanctioning powers10.

However, the main conclusion of the report is the willingness of ACAs to develop the network with their foreign counterparts and to share best practices.

It has therefore been decided that the NCPA will be in charge to develop cooperation between the ACAs and will create a dynamic center to connect ACAs around the world. The AFA which chairs the NCPA will thus be responsible for this implementation. Through its role in this international project, the signature of several cooperation protocols around the world with many ACAS11, the AFA clearly shows its willingness to appear more and more as a major player in global cooperation in the fight against corruption. In fact, it is already one of the main points of contact of the ACAs12. It is therefore highly likely that the AFA will carry some influence in the upcoming harmonization of ACAs best practices.

The French Anti-corruption Agency releases updated guidelines on the corporate anti-corruption compliance function

French entities were particularly solicited in the past few years to be proactive on compliance matters, in particular as regard to anti-corruption regulations. On December 19, 2019, the French Anti-corruption Agency (“AFA”), which has the mission to assist all person and entity to prevent and fight against corruption, released updated guidelines on the corporate anti-corruption compliance function1.

These Guidelines, which first version has been initially published in February 2019, gives the keys elements of what is expected by the AFA regarding the anti-corruption compliance function in a company.

I. The anti-corruption compliance function, a multi-task and intersecting function

The Guidelines highlights the strategical interest for a company to have a compliance process integrating dedicated anti-corruption compliance functions. These functions may be assigned to a dedicated person, depending on the entity’s characteristics (status, size, activity). The anti-corruption compliance officer shall however coordinate her/his action with the entity others compliance areas (such as competition law, fight against money laundering and terrorism financing, protection of personal data, export control etc.) and be applied at each stage and to each employee of the entity.

A variety of missions are attributed to the anti-corruption compliance officer. She/he will be responsible for designing a compliance program, managing the implementation and the update of her/his functions, spread an anti-corruption culture within the entity by implementing training sessions, be the reference contact of business partners, report on the efficiency of the program to the management. She/he will also have a key role for the implementation and the follow-up of any investigation related to allegations of corruption2.

Depending on the organization of the entity, the anti-corruption compliance officer will have responsibilities, or a consultative role shared with the entity’s others key managers (general counsel, human resources manager, internal audit manager, etc. 3).

II. The compliance functions governance coordinated and shared with the management

Even though the designation of a compliance officer is not mandatory, the AFA recalls that entity management is responsible for the implementation an efficient anti-corruption governance, which implies to clearly identify the person handling such functions4. In addition, the management will have to ensure a regular follow-up and update of the anti-corruption programs. Furthermore, the anti-corruption compliance officer will need to be provided with enough resources and means to fulfill her/his mission (a dedicated compliance team, external counsels, IT tools, etc.). She/he shall also be guaranteed to be supported and listened by the management and she/he might be helped by anti-corruption compliance referents deployed within the entity5.

The Guidelines recommend ensuring that the position of the compliance officer guarantee her/his objectivity and independence. She/he shall have an effective access to all useful information and is encouraged to be part of the decision-making process. She/he is however required to report on her/his activity to the management. 6 In case of delegation of powers, the management however remains administratively of criminally liable for anti-corruption breaches7. Also, Article 17 of the Sapin II law8 charges responsibility for the implementation of the compliance measures on the entity’s manager9. She/he can thus be held personally liable (as well as the legal entity) before the AFA Enforcement Committee10.

III. Specifications on the compliance function’s profile and skills

Notwithstanding that no specific background is required to embody anti-corruption compliance functions, the Guidelines provide a series of recommendation for recruiting the compliance officer. Independently of being recruited among the entity’s employees, she/he will need to (i) have a good knowledge of the entity (ii) be able to handle transversal functions (management, communication, impartiality, team spirit, patience, prudent) (iii) have good knowledge of the regulations and an experience of risk mapping, internal control and analyze tools. As to the Guidelines, being specifically qualified for anti-corruption compliance shall also be valorized11.

IV. Compliance functions imply specific liabilities

The Guidelines specify that the anti-corruption compliance officer cannot be held liable under article 17 of the Law Sapin II. It also indicates that from a criminal law perspective, a breach committed within the compliance officer functions cannot be considered as a constituent element of the offence of corruption. To be held liable, the law requires an active participation to the acts of corruption. Hence, weak or incomplete measures do not answer to this definition. The Guidelines however recall that an anti-corruption compliance officer might face disciplinary sanction in case of breach committed within her/his functions. It could for instance be the case if she/he failed to report o prevent a breach for which she/he was provided with the appropriate means to do so12.

The Guidelines send a strong and useful message to entities subject to anti-corruption regulation. Although the function is not mandatory, the anti-corruption compliance officer is presented as one of companies’ vital component for the fight against corruption.

France finalizes the transposition of the 5th Anti-Money Laundering Directive by adopting new provisions on the fight against money laundering and terrorist financing

On February 13, 2020, the French government published an Order1 transposing into French law the fifth European Anti-Money Laundering Directive2 entered into force on July 10, 2018. The provisions of the Order are transposed into Articles L. 561-1 to L. 566-3 and R. 561-1 to R. 562-5 of the Monetary and Financial Code (CMF) and aim to strengthen the AML/CFT mechanism by taking account the evolution in money laundering patterns.

I. Modification of the scope of entities subject to AML/CFT obligations3

The Order brings the scope of persons subject to AML/CFT obligations in line with European requirements, notably by including in the perimeter of AML/CFT control subsidiaries of financial sector companies, as well as tax advisory activities carried out by legal professionals4. The latter, previously excluded from the list, now join other legal counsels offering fiduciary and transaction advisory services and become subject to customer due diligence obligations. In addition, the autonomous funds for lawyers’ pecuniary settlements (CARPA) are now also subject to the AML/CFT obligations, as are the clerks of the commercial courts. Conversely, professionals in the art and property rental sectors will only be subject to the AML/CFT obligations for transactions above 10,000 euros and property management companies will no longer be subject to any obligations6.

II. Clarification of supervisory authorities’ obligations regarding AML/CFT control

The Order further clarifies AML/CFT control requirements expected to be met by the supervisory authorities. They must develop a good understanding of the specific risks of money laundering and terrorist financing presented by the supervised entities and need to adapt their control mechanism on a case by case basis to reflect these risks in the assessment. They are also required to review the assessment periodically or when major changes occur in management or activities. The authorities shall determine the frequency and intensity of their documentary and on-site inspections, taking into account, in particular, the risk profile of the persons subject to AML/CFT control7. In addition, a procedure for reporting breaches related to AML/CFT obligations through secure and anonymous channels is systematised for all supervisory authorities8. In fact, the reporting procedure issued from the Sapin 2 law which created a status of whistleblower in French law is also applicable to AML/CFT alerts.

III. Adjustment of the obligation of complementary vigilance

The Order also adjusts specific customer due diligence obligations. Additional due diligence measures are required to be introduced against high-risk third countries identified by the European Commission and the Financial Action Task Force9. Remote business relationships, however, are no longer considered to present a high risk of money laundering, requiring the systematic implementation of additional vigilance measures10. In addition, the concepts of correspondent banking and transit accounts, which receive special attention from regulatory bodies because of the risks inherent in these processes, have been clearly defined11.

IV. Register of beneficial owners: new rules for public access and strengthened liability for violation of declaration requirements

The beneficial owners are required to provide information allowing their identification. Beneficial owners who fail to make a declaration or report inaccurate or incomplete data may be subject to criminal proceedings12, leading to sanctions such as fines, ban from managerial responsibilities, and partial deprivation of civil and political rights. The supervisory authorities as well as persons subject to AML/CFT are required to report the absence of registration or any discrepancy between the information registered and the information available to them13.

Until recently, the public access to the register of beneficial owners was conditioned to a demonstration of a legitimate reason before the judge in charge of keeping the register14. The new rules no longer mention any specific requirement for public access to the register15. They however limit the scope of information that can be freely accessed by the public. That being said, information contained in the register is fully accessible to the authorities involved in the AML/CFT control16 and to persons subject to the AML/CFT legislation if their request is related to the abovementioned obligations17.

V. Enhanced role of TRACFIN18

The Order reinforces the confidentiality of the right of opposition that TRACFIN may address to any person subject to the AML/CFT obligations concerning a transaction suspected of constituting a money laundering operation19. Going forward, supervisory authorities cannot, under penalty of pecuniary sanctions, communicate to any unauthorised third persons, as well as to the author of the suspected operation, the existence of TRACFIN’s decision to stop the operation. TRACFIN’s ability to exchange information with its foreign counterparts is also reinforced20. Furthermore, provisions enabling it to exchange information with other French intelligence services are added21.

VI. Reinforced cooperation between supervisory bodies at national and European level

The information exchange between national and foreign supervisory authorities has been amplified. Notably, the Prudential Control and Resolution Authority (“Autorité de Contrôle Prudentiel et de Résolution” or “ACPR”), the Customs Administration and the French Anti-Corruption Agency (“AFA”) might exchange the information that can be useful for the performance of their respective missions22. Similarly, the Order also provides for enhanced coordination between national and European authorities, including the European Central Bank23.

Incompatibility of French asset freeze measures with EU law

France allows the introduction of national asset freezes. The free movement of capital is however one of the four fundamental freedoms of the EU single market1, and restrictions on capital movements between Member States as well as between Member States and third countries could only be allowed in exceptional circumstances2.

On November 8, 2019, the European Commission issued an Opinion3, stating that unilateral adoption of national asset freeze measures was incompatible with EU law.

The EU Commission’s position may thus have consequences for those Member States which, as France, have provisions in their national law, allowing the introduction of national asset freezes. Indeed, the Commission could bring legal action before the Court of Justice of the European Union (“CJEU”) against a Member State who it considers failing to comply with EU law4. Until then however, an Opinion of the Commission has no binding force5, which can raise question on its effectiveness.

I. European Commission considers incompatible with EU law unilateral adoption by a Member State of national asset freeze measures

The Opinion issued by the European Commission states that unilateral adoption of national asset freeze measures, introduced by the Member States to support the achievement of the EU Common Foreign and Security Policy (“CFSP”) objectives, would have a clear impact on the functioning of the internal market and would undermine the purpose and effectiveness of Article 215 TFEU6. Such measures would therefore not be compatible with EU law.

Measures such as assets freezes of EU or third countries nationals might affect movement of capital, including exports, imports, transfers of funds, investment, as well as access to the EU’s capital markets. Heterogeneous measures taken unilaterally by the Member States may also affect, without any economic justification, the competitive position of certain economic operators, creating competition distortion. Finally, they might also affect the exercise by economic operators of their right of establishment and to provide services.

The Commission based its position on the CJEU decision Kadi I7 of September 3, 2008, in which CJEU confirmed that Article 215 TFEU is the sole appropriate legal basis for the implementation of sanctions such as assets freezes adopted under the CFSP that can be used without a risk of potential distortions of the internal market. It also considered that unilateral restrictive measures adopted by the Member States would undermine the effectiveness and the purpose of this provision. The Court added that the sanctions are implemented through the adoption of Council Regulations and become immediately applicable in the Member States. Hence, their implementation is harmonised all over the EU territory.

The Commission finally emphasised that unilateral national restrictions to the free movement of capital within the EU that are allowed under Article 65 TFEU8 (such as capital controls that Cyprus and Greece were forced to introduce in 2013 and 2015 respectively in order to prevent an excessive outflow of capital during the European sovereign debt crisis9), cannot be considered as a legal basis for restrictions such as assets freeze that are adopted pursuant to Article 215 TFEU.

II. French law allows adoption of national asset freeze measures in contradiction with the Opinion

The asset freeze measures that apply in France10 derive from the EU Regulations on restrictive measures11 adopted under the CFSP and also from the national provisions listed in the French Monetary and Financial Code (CMF)12. Indeed, Article L. 562-2 of the CMF provides for the possibility to implement asset freezes measures against persons that commit, attempt to commit, facilitate, finance, incite or participate in acts of terrorism. It meets the requirements set out by the Financial Action Task Force and the United Nations Security Council (UNSC). Such measures can be introduced by decree issued conjointly by the Minister of the Economy and Finance and the Minister of the Interior and apply to financial institutions following a publication of the decree in the Official Journal of the French Republic. Their validity is limited to 6 months, renewable by a new decree13.

Article L. 562-3 of the CMF also allows to adopt national asset freezes against persons that have attempted to commit, facilitate or finance actions sanctioned or prohibited by resolutions adopted under Chapter VII of the Charter of the United Nations14 or acts adopted pursuant to Article 29 of the TEU15 or Article 75 of the TFEU16. It is to be noted that, as regards UNSC resolutions, they do not create obligations for the countries until they have been transposed into national law. Asset freeze measures under Article L. 562-3 are implemented following a decree issued by the Minister of the Economy and Finance and are automatically repealed when the EU Regulation establishing the asset freeze measures enters into force.

Consequently, while under Article L. 562-3 of the CMF a ministerial decree introducing asset freezes is usually issued following a UNSC resolution (that is or will be transposed into EU law) or an EU Council decision, under Article L. 562-2, asset freezes can be introduced independently from any international decision. This mechanism allows therefore unilateral national measures, which might not be included in the EU legislation, and which have been condemned by the Commission in the November 8, 2019 Opinion.

That being said, unless an intervention of a legally binding act or a decision by the CJEU confirms the Opinion, the French national asset freeze mechanisms should continue to be considered compliant with the EU law until otherwise decided.

Is there room for improvement in the French law on whistleblowers in the wake of the transposition of the European Directive of October 23, 2019 on whistleblowers protection?

Whistleblowers legal protection being widely fragmented from one Member State to another, the European Union adopted on October 23, 2019 a new Directive (the “Directive”)1 offering a European level protection to persons who report breaches of EU law.

France which needs to transpose this Directive within two years, did not wait long to acknowledge the changes introduced by the Directive. Indeed, a first Bill on the adaptation of French law to European provisions has already been presented to the French Parliament and is currently in the hands of the Commission for Constitutional Laws, Legislation and General Administration of the Republic of France2.

However, this text is not final, and amendments are likely to be made in the future. In fact, in a press release dated June 4, 2020, the French Defender of Rights (“Défenseur des Droits”)3 has called for an “ambitious transposal” of the Directive4.

I. A possible extension of the French scope of reporting

While French law on whistleblowing mentions report of “”, the Directive covers all violations related to Union acts in ten areas (i.e. public procurement, environmental protection, public health, consumer protection, protection of privacy and personal data5) and breaches affecting the financial interests of the Union. Each Member State will be able to extend the material scope defined by the Directive6 giving leeway to France to extend the scope of areas or acts that can be reported.

In that vein, the Defender of Rights suggests that the French government takes the opportunity of the transposition to introduce a specific whistleblowing mechanism for national security and defence issues7.

In addition, while French law limits whistleblowers protection to workers, the Directive extends the scope of the protection to a wider public. Article 4 of the Directive indeed provides that whistleblowers can be any persons who work or worked in the public or private sector and who have obtained information on violations in a professional context, whether they are employees, self-employed workers, shareholders or members of management or management bodies, monitoring of companies, volunteers or trainees8.

The Directive also grants protection to facilitators and third parties who are close to the authors of reports and who incur, by extension, risks of reprisals9. The Defender of Rights press release has called for a clarification of the role legal entities (such as NGOs and unions) may play in the whistleblowing procedure.

II. A possible reinforcement of the French whistleblowers protection framework

Unlike French law, the Directive does not require the whistleblower to act in a disinterested manner10. Hence, in order to benefit from the protective regime, the author of the report must have had “reasonable grounds to believe that the information reported was true at the time of the report” and be sure that, “this information fell within the scope of the Directive”11. Those conditions tend to ensure that the whistleblower makes a “responsible denunciation, driven by the sincere intention to preserve the public interest12” and aims to avoid “malicious, fanciful or abusive” reports. The European system also provides protection for persons in good faith who report an inaccurate violation13.

The Directive provides for internal and external reporting channels and encourages the primary use of internal channels “where the breach can be addressed effectively internally and where the reporting person considers that there is no risk of retaliation14.” The implementation of such internal whistleblowing systems is mandatory for companies over fifty employees and for cities of more than ten thousands inhabitants15.The Directive does not, however, prioritize internal reporting channels16.

According to the Defender of Rights, the transposal of the Directive should enable the consolidation of French reporting channels by strengthening the monitoring of the effective implementation of procedures for collecting alerts as well as designating external competent bodies to handle the processing of reports.

Whistleblowers’ anonymity must be guaranteed17. The principle arises from the duty of confidentiality binding entities and authorities collecting the alerts. Hence, the whistleblower’s identity or the information that could make it possible to identify her or him cannot, except within strictly limited exceptions, be disclosed without her or his consent. The Directive leaves the choice to the Member States to accept or not anonymous alerts18. This is not a major change in France since article 9 of the law Sapin II already requires “strict confidentiality on the identity of the reporting parties19”. The Directive requires that whistleblower’s protection measures explicitly prohibit reprisals and threats. Supporting measures to assist those who may be persecuted20, such as information and advice on remedies or even legal assistance, must also be implemented21. Each Member State is free to provide for financial assistance and psychological support measures for whistleblowers who face legal action22. Such provision was similarly discussed before the adoption of the law Sapin II, but was finally rejected by the Constitutional Council (Conseil Constitutionnel)23.

The European Directive on the protection of persons who report breaches of Union law clearly shows that the Sapin II law whistleblower protective framework is well advanced. The transposition is still an opportunity to go further by extending the scope of areas and acts that may be reported and by reinforcing the protective measures for whistleblowers.

Some recent developments in criminal law in France amidst the Coronavirus pandemic

In response to the coronavirus pandemic, the French government declared a nation-wide state of emergency on March 23, 20201, enabling the government for a period of 3 months, to take by decree any necessary measures to prevent further spread of the covid-19 in France. The lockdown was issued by decree of the French Minister of Health2.

Accordingly, on March 25, 2020, a decree amending French criminal procedure (the “March 25 Decree”) was enacted3.

Moreover, the law establishing the state of emergency amended the French Public Health Code introducing the offence of violating the lockdown4. Individuals are liable for a fine of 135 euros5. In case of a second violation occurring within a 15-day period, the fine is increased to 200 euros6. In case of a third violation occurring within a 30-day period, individuals face up to a 6-month jail sentence and a 3,750 euro fine7. The question of the constitutionality of this measure was brought to the Constitutional Council (Conseil Constitutionnel) which declared it in conformity with the Constitution8. On May 11, 2020, a new law extending the state of emergency and completing its provisions was enacted9 (the “May 11 Law”). The May 11 Law organizes the gradual end of the lockdown period and fixed the end of the state of emergency to July 23, 2020.

I. Protection of prisoners

It stands to reason that jails are especially susceptible to the spread of COVID-19 considering the difficult implementation of “protection measures” as well as the lockdown in cells. Therefore, articles 27 to 29 of the March 25 Decree allowed the Judge responsible for the enforcement of sentences to shorten by two months the sentence of convicted persons imprisoned during the state of emergency10, to grant early release to prisoners whose remaining detention period is 2 months or less11 and to convert sentences of 6 months’ imprisonment into community service and day-fines, inter alia.

On April 29, 2020, the French Minister of Justice stated that the number of prisoners had decreased by 11 500 since March 16, 202012. This unprecedented decline is due both to a decrease of court proceedings and to these early release measures.

However, these measures were rather paradoxical considering notably Article 16 of the March 25 Decree which extended automatically the custody time limits by two months when the prison sentence incurred was less than or equal to five years, by three months in other cases and by six months for the cases heard before the Court of Appeal. These extensions were widely criticized and gave rise to a number of procedures initiated before the French Administrative Supreme Court (Conseil d’Etat), notably by the Paris Bar Association as well as by the French National Bar Council requesting the suspension of the enforcement of the measures at stake. These requests were denied13. However, on May 26, 2020, the French Criminal and Civil Supreme court (Cour de cassation) specified these rules by stating that the extensions require the control of a judicial judge at short notice regarding the necessity of the custody. In all cases where such judicial control has not been or can no longer be carried out, the person in custody shall be released14. The debate went on, when the Cour de cassation transmitted to the Conseil Constitutionnel a question relating to the constitutionality of Article 11 of the March 23 Law, that is to say, to the possibility for government to directly legislate on custody. On July 3, 2020, the Council found this article compatible with the Constitution because it doesn’t preclude the intervention of a judge in a short delay in case of custody. However, the decision suggests that the violation of Constitution could come from a decree issued on the basis of these provisions15. This sentence could be understood as an incentive for a new question relating to the constitutionality of the March 25 Decree, adapting the rules of criminal procedure in accordance with the Law n°2020-29016.

This exceptional procedure has reached its end. The May 11 Law sets the principle of a gradual return to ordinary law of custody. It adds an article 16-1 in the March 25 Decrees providing that as of 11 May 2020, custody will no longer be extended without a decision of the competent judge taken after an adversarial debate17.

II. Protection of officers of the court

As part of early actions taken by the government all hearings were postponed except emergency cases to ensure protection of the officers of the court such as judges and lawyers as well as prosecuted individuals18.

In that respect, as of March 12, 2020, the prescriptive period for prosecution and punishment were suspended until one month after the end of the state of emergency19. If a legal act interrupted the prescriptive period such act remained legally valid but only took effect at the end of the suspension.

Additionally, the March 25 Decree, modified the procedural rules governing hearings. Thus, hearings could be led by only one judge subject to a decision of the president of the court20. It also provided that hearings and rulings could be closed to the public by decision of the president of the court. This measure was rare enough since hearings and judgment are to be pronounced publicly pursuant to article 6§1 of the European Convention on Human Rights. Moreover, the use of videoconferencing was generalized before all criminal courts, save for felony courts (Cour d’assises), without the need to obtain the agreement of the parties21.

III. A clarification on criminal liability for decision-makers

Decision-makers such as mayors and employers have been worried about the question of potential judicial consequences for the decisions they have made during the crisis22. The issue has been raised during the parliamentary debates before the adoption of the May 11 Law. It addressed the matter by creating a new article L. 3136-2 in the Public Health Code, which provides that for the application of article 121-3 of the Criminal Code relating to the conditions for establishing unintentional criminal liability, account must be taken of “the competence, power and means available to the perpetrator in the crisis situation that justified the state of health emergency, as well as the nature of his missions or functions, in particular as a local authority or employer23. Nevertheless, this provision seems to be more of a way to reassure elected officials than a juridical answer to a real risk. Indeed, a previous 2000 Law24 already restricted the conditions in which de liability of an elected official could be established.

The GRECO Fifth Evaluation Round report on France

The Group of States against Corruption (“GRECO”) was set up in 1999 by the Council of Europe to review and improve Members’ capacity to fight corruption. Anti-corruption policies are evaluated through the lens of the Council of Europe anti-corruption standards and the Group provides recommendations on potential legislative, institutional, and practical reforms.

France has recently taken a stronger stance on the fight against corruption. Whilst the adoption of the Sapin II anticorruption law in 2016 brought forth more stringent obligations on corporations1, the GRECO evaluation report published on January 9, 2020 focuses specifically on corruption amongst persons with top executive functions (“PTEFs”) and members of law enforcement agencies. It provided a fair assessment of recent progress that has been made in that regard but also identified vulnerable areas.

I. Preventing corruption amongst persons with top executive functions

Positive legislative developments were welcomed by the GRECO evaluation team (“GET”) but the report pointed out that there was still room for improvement in terms of transparency in public life.

It specifically underlined the lack of codes of conduct addressing integrity issues (conflicts of interest, obligations in terms of declarations, incompatibilities, gifts, post-employment obligations, contacts with lobbyists etc.) for PTEFs working in government.

While the Ethics Charter of the Presidency is seen as a step in the right direction, the adoption of codes of conduct was recommended along with the introduction of effective monitoring mechanisms and proportionate disciplinary sanctions in case of violation. The GET underlined that at present, the Ministry for Europe and Foreign Affairs was the only ministry that adopted a comprehensive code of conduct and argued that this practice could be extended to all ministries and PTEFs2.

Closer cooperation between the High Authority on Transparency of Public Life (“HATVP”) and the French Anti-Corruption Agency (“AFA”) was suggested in order to better assess and prevent the risks affecting PTEFs. The GET indeed noted that both these institutions already assist and advise ministries in drawing up risk assessments concerning PTEFs. Therefore, grouping this information together would likely result in a more accurate analysis3. It has to be noted however that just few days before the GRECO’s report was released, a new cooperation agreement was signed on November 26, 2019 between the HATVP and the AFA, aiming at strengthening the prevention and detection of collusion in public institutions4.

Transparency in exchanges between PTEFs and lobbyists was also identified as an area that can be improved. The Sapin II law introduced a digital register of lobbyists to inform the public on relations between lobbyists and the authorities5. However, only lobbyists who have initiated the contacts with PTEFs are required to register. This means that lobbyists who are contacted directly by the Government to engage on a specific topic are not required to register under the current system. An extension of that requirement to all lobbyists who have been in contact with PTEFs is seen as be desirable.

With regard to the criminal liability of PTEFs, the GET concluded that the establishment of the National Financial Prosecution Office (“PNF”) could facilitate the handling of corruption cases. It noted however that members of the governments are tried by the Court of Justice of the Republic (“CJR”) for acts performed in the course of their duties. The GET found that situation unsatisfactory as half of the members of the CJR are members of the Parliament, which may create suspicion on the independence and impartiality of the Court. Therefore, it was recommended that government members who are prosecuted for acts of corruption relating to the performance of their duties be brought before a court that ensures total independence and impartiality6.

II. Preventing corruption in law enforcement agencies

The GET examined measures aimed at preventing corruption in the main components of French law enforcement agencies: the Police Nationale and the Gendarmerie Nationale.

It recommended the adoption of a global strategy focusing on the prevention of corruption within law enforcement agencies on the basis of risk assessments.

Whilst it acknowledged the existence of a code of conduct incorporated into the Internal Security Code that applies to both institutions and which bears regulatory power, the GET took the view that concrete examples and situations should be included to illustrate situations that may present a risk with respect to integrity. A code with a commentary for the 32 articles has been prepared and the GET recommended that the commentary be revised to expand on integrity issues (conflicts of interests, gifts, handling of confidential information, contacts with third parties etc.) and provide concrete examples7.

Finally, the GET stated that the current reporting mechanisms set up for whistleblowers and the multi-layered procedure should be reviewed periodically and simplified. The entry into force of the European Directive on the protection of whistleblowers8, which deals with the simplification of the reporting channels9, should encourage France to improve its legislation on this point. In addition, it concluded that the training of law enforcement personnel should be strengthened to reflect those changes and provide for a more effective protection of whistleblowers10.

The report concludes on a series of recommendations and invites France to submit a report on the measures taken to implement those recommendations before June 30, 2021.

French Ministry of Justice reacts to the European recommendations for fighting international corruption

On June 2, 2020, the French Ministry of Justice, issued a criminal procedure circular on the fight against international corruption which presents to all French Prosecutors the principles guiding judicial action at the stages of corruption detection, investigation, prosecution and sanction (“the Circular”) 1. Although this circular doesn’t have the same binding effect as a law or a decree, it will definitely serve as a guideline, along with the French National Prosecutor Office (“PNF”) and French Anti-corruption Agency (“AFA”) guidelines.

This Circular is in line with the latest developments in French legislation and judicial practice since the Sapin II law and an additional demonstration of the willing of France to intensify its fight against corruption. Moreover, this circular comes after the anti-corruption body of the Council of Europe (“GRECO”) has stated that France has made efforts but the overall level of implementation of the 2018 recommendations was still insufficient 2, and before the OECD’s review of France in 2021.

I. The consolidation of the central role played by the PNF

The Circular gives the PNF a central role in the fight against international corruption. Its technical and legal expertise and the specific means at its disposal make it a “respected and indispensable interlocutor” on the international scene3. According to Nicole Belloubet, the former French Minister of Justice, the goal is to regain control over cases involving French companies tried before foreign judicial authorities, essentially the United States 4.

The Circular thus advises that mutual assistance requests be systematically processed with a view to possibly opening a mirror investigation by the PNF and that the PNF must be systematically informed of any corruption case that reaches the public prosecutor’s offices all over France. The Circular also invites the PNF to pay special attention to “national and foreign press articles” that would be likely to warrant in-depth verifications.5.

The text also enshrines the central role of the PNF in the coordination with others administrations and State agencies that have a role to play in the detection of international corruption (i.e. Ministry of Finance, French Anti-Corruption Agency, the French Development Agency (“AFD”); tax administration, diplomatic and consular posts, economic services and regional economic services, TRACFIN 6).

II. The promotion of voluntary disclosure and cooperation

The Circular reminds that proceedings must be considered against both legal entities and individuals and provides guidelines for judicial action at all stages of criminal proceedings.

The Circular underlines that “the voluntary disclosure by companies of acts of corruption committed in the course of their international business activities by some of their members is a valuable source of detection7 and thus encourages companies to report themselves. It calls for the full application of the Sapin II law to any person “carrying out all or part of his economic activity on the French territory8. It includes in particular the subsidiaries, branches and commercial offices of foreign companies. While the Ministry of Justice does not specify the degree of cooperation expected, it notes that companies should help prosecutors to identify key individual perpetrators 9. To encourage companies to demonstrate this cooperation and to inform them of the advantages of the CJIP the PNF is invited to “develop exchanges with organizations representing French companies (MEDEF, AFEP) in order to define and implement a framework and practical incentives for spontaneous disclosure10.

For individuals, the Circular gives a straightforward and explicit indication that this provision should be used in the future 11. Prosecution should be considered against employees involved in the corruption scheme, but also against executives and outside individuals involved in the commission of the offence. The Circular provides that any action by a guilty individual putting an end to the offence will result in a more lenient penalty. A procedure for prior admission of guilt – the Comparution sur Reconnaissance Préalable de Culpabilité (“CRPC”) – or referral to the criminal court, may be envisioned according to the background of the defendant as well as his degree of involvement 12.

This Circular is therefore a turning point, in that it stresses the importance of negotiated justice while recalling the tools that France has adopted to fight more effectively against international corruption, thus permitting efficient, proportionate and deterrent prosecution and sanction.

An environmental CJIP towards a greener transaction justice

At a time where ecological and environmental considerations are at the heart of current concerns, the question arose around the use of negotiated justice to punish environmental offences.

On 3 March 2020, the French Senate passed a Bill aiming at strengthening criminal law’s response to environmental harm1. As part of this Bill, an “environmental CJIP” is introduced, based on the model implemented by the Sapin II law2 for probity offenses.

A few days after this Bill, on March 11, 2020, a subsidiary of Vinci accused of dumping concrete residues into the Seine river, was sanctioned by the Nanterre Criminal Court within a guilty plea procedure (“CRPC”). Although the company was sentenced to a 90,000 euros fine and to comply with the immediate remediation of the polluted site, the environmental NGOs have pinpointed the CRPC as an inadequate measure for environmental offences giving companies a de facto “right to pollute3”.

While the opening up of negotiated justice to environmental offences illustrates a willingness to fight against them, the sanctions will need to be adapted to the reality of the damages.

I. The shortcomings of the repression of environmental offences under French law

When it comes to environmental matters, the French justice system tends to be considered incomplete on multiple grounds. The processing times are long, the reparation of damage is often incommensurate to the harm caused, and the measures to ensure that violations will not occur again are insufficient4.

Few environmental offences are sanctioned in court, and sanctions do not seem adapted to the damage caused. Indeed, environmental litigation represents only 1% of criminal convictions and 0.5% of civil convictions. The former French Minister of Justice, Nicole Belloubet explained however that “these figures do not, […], reflect the reality of the damage that is done daily to the environment and biodiversity5”. For instance in 2018, out of 1,993 prosecuted individuals on charges pertaining to environmental damage, only 27 were sentenced to prison and 954 were fined. With respect to legal entities, 60 out of 139 convicted were fined6. As a remedy, the Bill aims at refurbishing the environmental justice system by providing a better judicial response to environmental harm. The environmental CJIP may contribute to the fight against harm to environment, by encouraging offending companies to cooperate rather than sanctioning perpetrators.

II. The introduction of a negotiated environmental justice in which sanctions remain to be adapted

The CJIP offers a new way of tackling high-stake financial crimes committed by legal entities.

According to former French Minister of Justice, the goal of the environmental CJIP is to “make companies more responsible and mobilize them on ecological issues instead of focusing on seeking the criminal responsibility of managers7”. The conclusion of an environmental CJIP will lead to the payment by companies of a fine proportionate to the benefit derived through the misconduct, up to a limit of 30% of the entity’s average annual turnover over the previous three years8. A CJIP will also include the implementation of an environmental compliance program, under the supervision of the Ministry of the Environment, and the reparation of environmental damages within a three-year delay9. The content of the compliance programs is yet to be determined – it could for instance, be based on internal procedures mirroring those in place for corruption matters such as a reporting procedure, the implementation of a code of conduct and risk mapping10.

As a tool of the new negotiated justice movement, the CJIP is recognized for its growing success in France since it came into force and appears fit to process the complexity of environmental matters and legislation. The intended measures regarding the amount of the fine may however not be adapted to all environmental damage. Indeed, environmental damage does not necessarily imply monetary exchanges, and it may for instance be difficult to evaluate a benefit that derives through accidental pollution or lack of diligence. Moreover, one of the main challenges following environmental damage is to restore the initial state of land and avoid aggravation or repetition of the damage.

Some NGOs thereby fear that such settlements could restrict the impact of sanctions and neglect the crucial educational aspect pertaining to environmental issues11.

Paris Bar Council releases a Report and updates the Guidelines on the role of lawyers in internal investigations

The strengthening of the French anti-corruption legal framework increases the number of corporate internal investigations and paves a new way for lawyers to provide assistance and advice to their clients. To better apprehend this relatively new practice, the Paris Bar Council issued guidelines in 2016 – the Vademecum on the Investigating Lawyer – annexed to the Internal Rules of the Paris Bar.

In the face of certain practical challenges, the Paris Bar Council also issued a report on December 10, 2019 in order to provide further solutions and guidance to lawyers. This report addresses the challenges and interests at plays in relation to the status and the role of the “investigating” lawyer in an internal investigation (the “Report”1) and calls for the amendment of the Vademecum2. Articles of the Vademecum were thus modified in 2020, namely to reaffirm the application of professional secrecy and independence of the investigating lawyer.

I. A uniform application of professional secrecy to the “investigating” lawyer

When issued in 2016, the Vademecumdistinguished between whether the lawyer was providing expertise or assistance and advice in order to determine the application of professional secrecy. The 2020 updated Vademecumremoves this distinction and calls for a consistent application of professional secrecy.

Indeed, the Paris Bar Council abolished the concept of lawyer expert by considering that internal investigations, insofar as they can serve and feed communications to the prosecuting authorities, are necessarily part of an assistance and advice mission and are thus covered by professional secrecy.

This position goes against the Guidelines on the implementation of the CJIP issued by the French Anticorruption Agency (“AFA”) and the communications of the National Financial Prosecutor Office (“PNF”) in that they indicate that not all documents in an internal investigation report are necessarily covered by the professional secrecy of the lawyer3.

The Vademecumalso specifies that professional secrecy shall apply to external experts and assistants the lawyer will have recourse to and commission during internal investigations.

Article 3 provides that “[a]s in all matters, the lawyer in charge of an internal investigation is bound by professional secrecy solely with respect to his/her client – no other person may request to benefit from it. In accordance with the rules of professional secrecy, when a report or any other document is drawn up by the lawyer during his/her mission, it is handed over to the client exclusively, who remains free to pass it on to a third party”.

II. The assessment of the independence of the “investigating” lawyer

Within the course of an internal investigation, the lawyer of the legal entity becomes an “investigator”, an information and “evidence collector4.

In a context of a cooperation with the authorities, the AFA and PNF guidelines encourage “regular exchanges” between the lawyer and the authorities.

This incentive raises questions, particularly with respect to the extent of what a lawyer can disclose. The Report reaffirms the independence of the lawyer vis-à-vis authorities in the course of an internal investigation. Article 10 of the Vademecum provides that “[t]he lawyer conducting an internal investigation shall ensure that he/she is independent in the governance of the investigation and possible communications with an authority”.

Considering this principle of independence, the Vademecumalso defines the limits as to the intervention of the “investigating” lawyer. Indeed, “[i]f the internal investigation is called into question, the lawyer may recommend to his/her client to be represented by another lawyer for the separate stages of the internal investigation”. While the Vademecumdoes not prohibit the investigating lawyer to assist her/his client in investigative or judicial proceedings, relating to or arising from the internal investigation, it specifies that she/he “should refrain from doing so, to represent the client in proceedings brought by the client against a person the lawyer has interviewed during the internal investigation”. In any case, she/he “shall refrain from accepting an investigation that would lead to an assessment of work previously carried out by him/her”.

Although internal investigations have been carried out in France for several years, there are no dedicated standards governing them. While international standards are applied, and some rules are drawn from existing laws, the clarification of ethical rules for practitioners by the Paris Bar Council is a helpful way forward.

French criminal procedure welcomes the European Public Prosecutor

On March 3, 2020, the French Senate passed and communicated “the European Public Prosecutor’s Office and Specialized Criminal Justice” Bill1 to the National Assembly in order to adapt the French criminal procedure to the recent creation of the European Public Prosecutor’s Office (hereafter “the EPPO2”).

The EPPO, implemented on October 12, 2017 by the European Union3 to slow the negative impact on the Union’s annual budget, i.e. almost 4%4, has the power to directly pursue offenses, e.g. tax fraud or embezzlement, affecting the European Union’s financial interests within the 22 member countries (hereafter “participating countries”).

This judicial authority will rely on a two-level structure consisting of a central, i.e. a European level with a European Chief Prosecutor, two deputies and a college of 22 prosecutors, and of a decentralized national level with European Delegated Prosecutors (“EDP”) for each participating country. The central level establishes the principles guiding judicial action via strategic guidelines and supervision of the investigations conducted at national level by the EDP5. At decentralized level, the EDPs will oversee domestic investigations, prosecutions and bring to judgement cases under EPPO’s competence6.

Pursuant to French law, several judicial actors with respective specific roles are involved in the sanctioning of those having committed offences. The Public Prosecutor (Procureur de la République) represents the interests of the State in criminal proceedings and exercises prosecutorial discretion in deciding whether to press charges. The Public Prosecutor also carries out preliminary acts of investigation. The Investigating Judge (Juge d’instruction) is an independent and impartial judge, assigned to lead complex criminal investigations and decide whether to refer the case to the court for judgement or dismiss the charges. As a reflection of this impartiality of this judge, the investigation’s purpose is to find the truth, with equal emphasis on establishing innocence and establishing guilt.

The main purpose of the French Bill is therefore to adapt French criminal proceedings to this extensive and unprecedented mission of appointed EDPs.

I. The Bill establishes a special status to protect the independence of the European Delegated Prosecutors

In France, Prosecutors are placed under the authority of the Ministry of Justice, from which they receive instructions on criminal policy.

To guarantee the independence of the EPPO and avoid any national interference, the participating countries have committed to respecting the independence of the EDPs. They are prohibited from “seeking to influence [the EDP] in the performance of their tasks7.

To honor its commitment, the French Parliament decided that the EDPs, while remaining French prosecutors, will be considered as external to the national judicial body and therefore, external to the hierarchy of the Ministry of Justice.

Moreover, despite the Public Prosecutor of the Paris Court of Appeal having the authority to initiate disciplinary proceedings against national prosecutors, he will not have the authority to do so against the French EDPs8. The French EDPs will thus only report to and receive instructions relating to European prosecution mechanism from the EPPO.

In addition, to ensure the effectiveness of their mission and according to soon-to-be-implemented article 696-109 of the French Code of Criminal Procedure, the EDPs will be granted the right to represent the EPPO before a majority of French jurisdictions, i.e. the judicial courts, the Courts of Appeal, the Investigating Judge’s chamber, and to appeal against any decision taken by the courts of law.

II. The Bill establishes a new status for the European Delegated Prosecutors, revolutionizing French criminal procedure

De facto, the jurisdiction of the EDPs is limited as its scope pertains to offences against the financial interests of the European Union9. And although article 4 of the European Regulation states that the EPPO shall “exercise the functions of prosecutor in the competent courts of the Member States, until the case has been finally disposed of”, it has been decided that the EDPs appointed in France will not intervene before the French Supreme Court (Cour de Cassation)10.Despite these limits on the EDPs’ jurisdiction, the prerogatives granted to them constitute a marked turning point in French criminal procedure law.

Indeed, while the Bill facilitates the integration of the French EDP into the national procedural framework, it also aligns the EDP prerogatives with those of the French Public Prosecutor and those of the Investigating Judge. Some procedural acts normally within the competence of the Investigating Magistrate, will thereby be carried out by the EDPs directly11. The EDPs will be empowered to investigate with impartiality, to prosecute, to bring cases before court, to order judicial supervision or to decide on the status of the defendant, e.g. suspect, assisted witness or witness. Their investigations will be conducted within the existing investigative framework at both the investigation and the pre-trial stages.

Considering these significant changes in procedure, it was deemed appropriate to provide that the French EDPs must request the authorization of the liberty and custody judge (Juge des libertés et de la detention) to implement measures that infringe individual liberties, e.g. searches without consent, wire-tapping, geo-location and special investigative measures12.

Despite the explanations provided during the first parliamentary debates, many questions are still pending, namely with respect to defense rights. Close attention should thereby be paid to future debates before the National Assembly and the effective implementation of these EDP to avoid curtailing of defense rights.