GLOBAL JURISDICTION FOR A GLOBAL CRIME: THE LONG REACH OF

ANTI-BRIBERY LAWS IN G7 NATIONS

By Tyler Hodgson[1]

With the notable exception of Canada, all 29 signatories to the Organization for Economic Cooperation and Development Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (“OECD Anti-Bribery Convention”) have adopted the ‘nationality principle’ in their enabling legislation to assert jurisdiction over citizens (and often permanent residents) who commit bribery offences abroad.[2] This includes the six other G7 member nations: Britain, America, France, Germany, Italy and Japan. This paper will briefly review the various jurisdictional provisions of the OECD anti-bribery enabling legislation of the G7 nations.

Under section 12 of the recently promulgated UK Bribery Act, the British courts have been granted jurisdiction over any natural or legal person who has a “close connection” with the United Kingdom, “even though all the actions in question take place abroad.”[3] Accordingly, a British citizen or ordinary resident in the United Kingdom can be liable for foreign acts of bribery.[4] In relation to corporations, the Bribery Act grants British courts jurisdiction over any commercial organization that “carries on a business, or part of a business” in the UK.[5] Given the recent passage of the Bribery Act, the UK courts have not yet interpreted the phrase “part of a business;” however, the Ministry of Justice has issued guidance suggesting that a significant business footprint must exist in Britain before prosecuting authorities will take action against a company under the Bribery Act. For example, the Ministry advises that neither a listing on the LSE nor the incorporation of a subsidiary in the UK will, in and of itself, mean that a corporation is carrying on part of a business in Britain “since a subsidiary may act independently of its parent or other group companies.”[6] Given the plain wording of the UK Bribery Act, however, some legal commentators and even the Serious Fraud Office have expressed scepticism that the British courts will similarly limit the scope of the Bribery Act, as a company that is listed on the LSE would seem to prima facie conduct at least a “part of” its business in the UK.[7]

Under the American Foreign Corrupt Practices Act (“FCPA”), any US entity that is required to register with the Securities and Exchange Commission (“SEC”)[8] or file periodic or supplementary reports with the SEC,[9] is considered an “issuer,” subject to the strictures of the FPCA. Further, any commercial operation, incorporated or unincorporated, that is organized under the laws of the United States, as well as any citizen or resident of the United States, is also captured by the legislation as a “domestic concern.”[10] Any US issuer or domestic concern is liable for corruptly doing any act “outside of the United States” that improperly does anything to assist in obtaining or retaining business for that issuer or concern or improperly “directing business” to any person.[11]

As mentioned above, Canada is the only OECD nation that does not embrace the nationality principle of jurisdiction in its anti-bribery legislation. In Canada, the Corruption of Foreign Public Officials Act (“CFPOA”) requires that a “real and substantial connection” exist between the commission of the offence and Canadian territory. In effect, this means that Canada will not prosecute an offence of bribery on the basis of Canadian citizenship alone. At one point, the CFPOA was in the process of being amended to permit the prosecution of Canadian citizens and permanent residents, as well as businesses incorporated under the laws of Canada, for any “act or omission outside Canada” that is meant to obtain or retain an advantage in the course of business by bribing a foreign public official[12]. The Bill to reform the CFPOA, however, died in committee when Parliament was prorogued in December, 2009. To date, no further progress has been made to recognize the nationality principle under the CFPOA.

Traditionally, civil law jurisdictions have been more receptive to recognizing the nationality principle in criminal law and their respective pieces of OECD legislation tend to reflect this fact. In Germany, for example, the Act on Combating Bribery of Foreign Public Officials in International Business Transactions applies German criminal law to bribing foreign public officials in connection with international business transactions, regardless of the place of the commission of the offence.[13] In France, criminal law is applicable to any felony committed by a French national abroad.[14] This allows France, under its Anti-Corruption Act, to prosecute the bribery of a public official of a foreign state or international organization, as well as the bribery of foreign or international judicial staff, regardless of whether these acts were committed inside or outside of the European Union. In Italy, Act No. 300 of 29.9.2000 prohibits bribing a foreign public official to procure an undue benefit for him or herself (or others) in international business transactions. In answer to queries raised by the OCED Working Group, and consistent with the application of the nationality principle, the Italian government expressed the view that Italy would have jurisdiction to prosecute an Italian citizen for a bribery offence committed abroad.[15] Finally, in 2005, Japan amended its Unfair Competition Prevention Law to list applicable bribery offences in Article 3 of the Japanese Penal Code, permitting the prosecution of Japanese nationals for enumerated offences committed abroad.

Enforcement activity has historically varied significantly within the G7 group of nations. In 2010, for example, the United States had 227 foreign bribery cases, Britain 17, Japan 7, and Canada 2.[16] Nonetheless, as noted above, with the exception of Canada, the remaining six member G7 nations have enabling legislation in place that would permit overlapping prosecutions for acts of bribery committed by foreign nationals abroad. This is certainly a fact that lawyers advising multi-national corporations need to be acutely aware of, especially because some G7 nations may significantly increase their anti-bribery prosecutions in the near future[17]. With so many potential forums of legal action, corporate counsel must always be mindful of the global implications of any act of bribery and negotiate settlements accordingly. As country singer Tennessee Ernie Ford crooned about his fists in the song ‘Sixteen Tons’, “If the right one don’t get you then the left one will.”

[1] Tyler Hodgson is the Regional Leader of the White Collar Crime Practice Group in the Toronto office of Borden Lander Gervais LLP.: http://www.blg.com/en/home/our-professionals/Pages/hodgson-tyler.aspx. The views expressed here are those of the individual author writing in his individual capacity and are not necessarily those of the ABA or the Task Force.

[2] Transparency International 2011 Progress Report: Enforcement of the OECD Anti-Bribery Convention, p. 6.

[3] Bribery Act 2010 (c. 23); Ministry of Justice Explanatory Note #59.

[4] Bribery Act, s. 12(4).

[5] Bribery Act, s. 7(5).

[6] Ministry of Justice, “Guidance about procedures which relevant commercial organisations can put into place to prevent persons associated with them from bribing”, Section 7, paragraph 36.

[7] See Jonathan Russell, “Serious Fraud Office Risks Clash with Ministry of Justice over Bribery Act”, The Telegraph, July 1, 2011.

[8] This would include any entity with assets greater than $1 million USD and with more than 500 shareholders (s. 78l(g)).

[9] See s. 78o(d).

[10] s. 78dd-2(h)(1).

[11] ss. 78dd-1(g) and 78dd-2(i).

[12] Bill C-31: An Act to amend the Criminal Code, the Corruption of Foreign Public Officials Act and the Identification of Criminals Act and to make a consequential amendment to another Act, s. 38.

[13] Act on Combating Bribery of Foreign Public Officials in International Business Transactions, 10 September 1998, Article 2, section 3.

[14] Penal Code, Article 113-6.

[15] Italy: Phase 2, Follow-up Report on the Implementation of the Phase 2 Recommendations Working Group Report, Directorate for Financial and Enterprise Affairs, OECD, 23 March 2007, p.23

[16] Transparency International 2011 Progress Report: Enforcement of the OECD Anti-Bribery Convention, p. 9.

[17] See, for example, Michael Connor, “New UK Bribery Law Could Have International Impact,” Business Ethics: The Magazine of Corporate Responsibility, January 6, 2011.

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Tyler Hodgson

Tyler Hodgson