A new offence of failure to prevent human rights abuses is among the proposals for comprehensive reform of the laws on corporate criminal liability published by the Law Commission today. The options are a response to concerns that the current law in England and Wales does not fully hold companies and other bodies to account for criminal acts.

One obstacle is the ‘identification principle’, which states that only the acts of a senior person representing the company’s 'controlling mind and will' can be attributed to the company. In practice, this is limited to a small number of senior managers. This means that it can be much easier to hold a small company to account for wrongdoing than a large business where responsibility is more diffuse, the commission states. 

A proposed solution would be to allow conduct to be attributed to a corporation 'if a member of its senior management engaged in, consented to, or connived in the offence'. 

Other proposals include new ‘failure to prevent’ offences covering fraud by an employee or agent, human rights abuses and computer misuse. The government could also introduce civil High Court actions, based on Serious Crime Prevention Orders, with a power to impose monetary penalties, the commission suggests. 

Specialist solicitors welcomed the publication. Alun Milford, criminal litigation partner at London firm Kingsley Napley said: 'This is a carefully considered piece of work by the Law Commission and gives the government clear, practical options for reform of the current legal landscape.

'It rejects as unviable the US model, and is based instead around options based on our existing law: the possible expansion of the identification principle and a framework for expanding the failure to prevent model. Reform along these lines would have a very significant practical impact on the way that companies are dealt with by the criminal justice system.'

Liam Naidoo, partner at international firm Hogan Lovells, said: 'The Law Commission’s options paper rightly rejects a "one size fits all" approach to reform of corporate criminal liability, and concludes that directors should not be made liable for neglect in relation to offences that presently require proof of dishonesty or intent. This approach will be welcomed by corporates already under compliance burden.'


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