Recent Supreme Court case law on Compliance – Compliance Keys #24

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After more than (10) ten years since the introduction of the criminal liability of legal entities in the Spanish Criminal Code, the Supreme Court has had the opportunity to rule on issues affecting Compliance on numerous and diverse occasions.

Thus, this ComplianceKeys24 will provide a list of the most relevant rulings of the Supreme Court on Compliance in the last two (2) years:

Supreme Court jurisprudence on Compliance
Year Decisions Main issues
2022 STS 36/2022, of January 20 The Supreme Court convicts the legal entity and its administrator for the crime of fraud. The Court understands that there is no double conviction for the same fact (bis in idem) as the administrator is not the partner owner of the capital stock of the legal entity. Consequently, the conviction does not imply a double penalty.
STS 56/2022, of January 24 The Supreme Court analyzes the employer’s powers of access to employees’ corporate email. In particular, the High Court dismissed the appeal filed on the grounds that the search of the corporate email of the employees who had allegedly committed irregularities violated their privacy rights, insofar as the corporate control measure had been carried out without the necessary guarantees.
STS 264/2022, of March 18  

It rejects the possibility of holding a sole proprietorship criminally liable due to its fully instrumental nature. Specifically, the Court understands that, given that the company has only one partner and administrator, the assets of which are confused and diluted with those of the legal entity, the latter cannot be condemned.

It is alleged that the legal entity lacks sufficient organizational development to differentiate it from the natural person. Consequently, article 31 bis of the Criminal Code cannot be applied given the impossibility of differentiating between the natural person (partner and administrator) and the legal entity and the impossibility of implementing a regulatory compliance program in the latter.

STS 747/2022, of July 27th The Supreme Court excludes the conviction of the legal entity by virtue of the principle of non bis in idem, since it is a sole proprietorship that corresponds one hundred percent (100%) to the convicted natural person.

In particular, the High Court understands that when the individual convicted as a natural person is the sole owner of the company, it is not possible to punish the legal entity as well.

STS 792/2022, of September 29th Addresses and maintains, mainly for procedural aspects, the imposition of the suspension of activities of a company for a period of two (2) years for the commission of a crime against employees’ rights under articles 129.3 and 33.7.c) of the Criminal Code.
STS 813/2022, of October 14 It advocates the need to implement compliance programs / Compliance Systems in companies also to avoid and prevent internal fraud and economic damage to companies.
2023 STS 1014/2022, of January 13

The Supreme Court, as a note, pronounces in this ruling on the effectiveness of Compliance Systems to prevent criminal conduct of which companies may be victims. In this sense, Compliance Systems not only mitigate the conducts that may generate a possible corporate criminal liability, but also hinder what the High Court calls “self endangerment“.

Thus, the Supreme Court considers that, although the conduct being prosecuted cannot entail the criminal liability of the legal entity (these are crimes of misappropriation, which are not susceptible to generate the attribution of criminal liability of the legal entity under article 31 bis of the Criminal Code), of which the legal entity itself (a sports club) would have been a victim, these could have been avoided with control measures aimed at preventing the abuse of personal relationships (through controls relating to seizures, for example).

In this sense, also, Provincial Court of Madrid Decision 90/2023, of February 22, 2023.

STS 89/2023, of February 10

In the present decision, the Supreme Court resolves in cassation the famous “Pescanova Case“. Among other issues regarding the criminal liability of legal entities, it is worth mentioning the analysis carried out in this ruling regarding the element of “direct or indirect benefit“, required both in the cases of letter a) (crimes committed by directors) and in those of letter b) (crimes committed by employees) of article 31 bis of the Criminal Code, in order to attribute criminal liability to legal entities.

The Supreme Court points out that, in fact, what article 31 bis of the Criminal Code requires, as an indispensable element for the criminal liability of the legal entity to be established, is not that the legal entity has obtained as a consequence of the crimes committed in its name or on its behalf a real, direct or indirect benefit, but that those criminal acts have been committed “for the benefit” of the legal entity.

Thus, legal entities may be convicted for criminal conduct that may even have caused them some kind of damage, when they were originally carried out with the purpose of bringing them some kind of benefit, direct or indirect.

STS 321/2023, of May 9 The Supreme Court, in the present decision, upholds the appeal of the Public Prosecutor’s Office in the sense that the criminal liability of the legal entity does not exclude the individual criminal liability, that is, of the material perpetrators of the criminal conduct.

In this sense, the Public Prosecutor’s Office and the High Court agree that the system of criminal liability of legal entities complements that of natural persons, but does not replace it. It is not a question of deciding whether the criminal consequences are to be borne by the natural person or by the legal entity, but whether, in addition to the natural person, the entity on whose behalf he acted must be criminally sanctioned. This double sanction will be applicable when the conditions set forth in article 31 bis of the Criminal Code are met.

Finally, it establishes that only if the legal entity can be identified with the person criminally responsible (in the case of very small entities, for example) would it be possible to waive one of the convictions (that of the legal entity) so as not to violate the prohibition of ne bis in idem (punishing the same person twice, for the same facts, on the same grounds).

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