A change to Czech law on the criminal liability of companies (and other legal entities) will come into force on 1 December 2016. The radical approach adopted in the new law significantly increases the risk of companies being convicted of criminal offences.
The Czech Act on the Criminal Liability of Legal Entities (the “Act”) currently lists about 80 offences which can be committed by companies, as opposed to natural persons. Offences not listed in the Act cannot be committed by companies. After long discussion of whether this or that particular offence should be included in the list, the opposite approach is now being taken. The amended Act provides that all crimes, offences and misdeeds set out in the Criminal Code can be committed by companies unless they are included in a new list of about 20 items set out in the Act. These include, with some logic, manslaughter, maternal infanticide, brawling and bigamy.
Concerns have been voiced that the new approach will lead to more criminal complaints being made against companies as a form of commercial bullying. There are some grounds for sharing these concerns, however a deliberate misuse of the criminal law could back fire on the complainant. Civil claims and, depending on the facts of the case, criminal complaints could be made by an innocent company against a false accuser.
Release from Liability where Management at Fault
The increased risk of a company’s liability for criminal offences is, however, mitigated by another major change to the law. A company may use as a defence the relevant offence being committed by a manager, provided the company has used reasonable endeavours to prevent the commission of the crime, especially by implementing adequate policies and procedures. Previously, companies could only escape criminal liability if the crime was committed by an employee or person in a similar role acting independently of the company.
As a result of the above, criminal law compliance programmes will become an increasingly useful tool helping companies to avoid criminal liability. Not every measure that a company puts in place will, however, be sufficient. Measures will need to be functional and tailored to the company in question. Unfortunately, no guidelines or recommendations have been developed by the Czech authorities to assist businesses in putting measures in place. It is therefore advisable for companies to invest time and money in developing the most robust compliance programmes practicable for them.
By Christian Blatchford, Counsel, and Milan Sperl, Lawyer, Kocian Solc Balastik