The keys to the first decision of the Spanish Supreme Court on Criminal Compliance

Judgement by the Spanish Supreme Court on 29 February 2016

The origin of legal entities’ liability goes back in the USA with the New Central and Hudson River Railroad Judgement in 1909.

In Spain, criminal liability of legal entities was included in the Spanish Criminal Law in 2010 and it has been modified in the extension of responsibility by including political parties and unions in 2012. And finally, the last reform of the Spanish Criminal Law proceedings in 2015 (article 31 bis of the Criminal Law), specifies the liability of the legal entities and also regulates the circumstances for an exemption from liability provided that all necessary preventive measures have been taken and that proper control has been exercised.

The Judgement of the Spanish Supreme Court, Criminal Chamber, dated February 29, 2016 upheld the National High Court’s sentence on three companies for their participation in crimes against public health.

| The Supreme Court provides guidelines on criminal prevention for companies and institutions. This is a challenge for companies that should certainly be updated on Criminal Compliance |

First, as stated in the sentence, it is necessary to prove that the natural person who committed the crime is a member of the legal entity or has a direct relationship with it in order to sentence a legal person.

Furthermore, the Company must have failed in the obligation to establish monitoring and control measures in order to prevent the commission of criminal acts. To avoid conviction, it is essential to prove that the monitoring instruments have been appropriate and effective, thus showing "the culture of respect for law as a source of performance of its organizational structure whatever other culture each individual who is part of the company may have”. 

It should be pointed out that, in the aforementioned sentence, the Spanish Court clarifies that so-called "screen companies" (since they lack legal activity and have been set up with the aim of committing crimes) should be considered outside criminal responsibility regulated in article 31 bis of the Criminal Code.

Being involved in such a situation can be devastating for the company’s reputation. For that reason, having a proper, adequate, effective compliance program, duly executed, enables the legal person to quickly exempt from responsibility and, consequently, to avoid greater reputational damages.