The Serious Fraud Office has succeeded in an appeal over the enforcement of a deferred prosecution agreement which a business argued could not be enforced.
The SFO and scientific instrument maker Güralp Systems Ltd finalised a DPA in 2019 that included a requirement for £2,069,861 to be paid within five years, as well as a number of other obligations. The sum was the gross profit made from allegedly criminal activity, but no timetable for payment was set. While the company met the rest of its obligations under the DPA, it did not make the payment under the agreement, which expired in October 2024.
A month later the SFO made an application for a determination by the court that the business was in breach of the DPA. The company argued the DPA was no longer enforceable because it had expired.
Lord Justice Edis and Mr Justice Calver in Guralp Systems Limited v The Director of the Serious Fraud Office said: ‘The judge certainly thought that the DPA was enforceable in the event that the money was not paid. No doubt the SFO did as well. GSL, it is to be remembered, joined with the SFO in inviting the court to make the declaration.
‘The judge clearly thought that in the event of non-payment by the expiry date the SFO could take steps to remove the suspension of the indictment and to proceed with its prosecution. In these circumstances it appears that all parties to the hearing in October 2019 understood that if the money was not paid by the expiry date the SFO could take the steps which it has now taken to renew the criminal proceedings. They invited the court to take an important step in criminal proceedings on that basis.’
Read more
The judges added that ‘no clear words’ were present in the DPA to show that the company would be relieved of its obligation to pay any part of the disgorged profits which remained unpaid in October 2024. ‘Indeed, that construction would be quite contrary to the interests of justice which the hearing in October 2019 has been concerned to promote.’
Finding the terms of the DPA ‘consistent with…the objective intention and purpose of the agreement’, the judges added: ‘The parties knew that the duration of the agreement was to be for a full five years in order to allow for full payment by GSL by that date, but if full payment was not made by the end of five years, the DPA would remain in force thereby enabling the SFO to take further steps to seek to obtain full payment, whether by way of variation of the DPA or by way of an application to the court to terminate the DPA.’
4 Readers' comments