Application of the double jeopardy prohibition to a deferred prosecution agreement in the Oil For Food case
On 18 June 2015, the Paris criminal tribunal rendered its judgment in one of the two cases that have reached the French courts in relation to allegations of bribery in the context of the Oil For Food (OFF) programme.
The Paris tribunal applied for the first time the principle that the double jeopardy guarantee would prohibit a second prosecution based on the same facts, where a Deferred Prosecution Agreement (DPA) had already been reached with a competent authority (in this case, the U.S. Department of Justice). The precedent is significant not only because it applies the double jeopardy principle to a DPA for the first time (as opposed to a final judgment on the merits of the case) but also because it accords a res judicata effect to the decision of a foreign authority.
The oil for food scandal
The OFF programme was instituted by the United Nations (UN) with the stated purpose of relieving the suffering of civilians resulting from UN sanctions against Iraq (imposed following Iraq's invasion of Kuwait in 1990). In essence, the OFF programme allowed the sale of Iraqi oil by the Iraqi Government in exchange for food and commodities.
Companies that wished to buy oil or sell products in Iraq had to make payments into a UN escrow account, rather than directly to the Iraqi Government.
In 2000, a number of Iraqi officials sought to circumvent the OFF programme by overcharging contracts by up to 10% and asking companies to divert the overcharged amounts to discrete bank accounts. The money was then transferred to the Iraqi Central Bank.
Oil for food criminal proceedings
Following the publication of a report by a UN Independent Inquiry Committee, several countries initiated criminal investigations against companies identified as having paid "kick-backs" outside the remit of the OFF programme. The U.S. Department of Justice (DoJ) was particularly active in that regard. It entered into numerous guilty pleas and deferred prosecution deals with U.S. and foreign companies, in exchange for their admitting to having made illicit payments to the Iraqi state. In France, criminal investigations were initiated against a number of French individuals and French companies in relation to similar payments.
Double jeopardy and deferred prosecution agreements (DPAs)
The issue arising in the French OFF cases is that a number of companies prosecuted in France had already entered into a plea bargaining agreement or a DPA with the U.S. DoJ in relation to wrongdoings committed during the OFF programme.
Although foreign criminal judgments may have a res judicata effect in France under certain conditions, the ne bis in idem principle was generally understood to only become operative when a defendant was acquitted or convicted by a court or tribunal. However, in the first OFF criminal case, the Paris criminal court ruled that the double jeopardy rule applied to a U.S. plea bargaining agreement insofar as the plea agreement resulted in a conviction entered by a U.S. court.17
The requirement of a "decision by a court" was potentially more problematic with DPAs, which involved defendants agreeing to pay fines and to implement corporate reforms, without a finding of guilt by a court. The fulfilment of the specified requirements of the DPA results in the formal dismissal of charges.
Despite these differences, we argued in the second OFF case that DPAs should prevent prosecutions for the same reasons as in France given that, under U.S. law, the fulfilment by a company of all the specified conditions set out in the DPA would bar the DoJ from initiating proceedings again based on the same facts ("dismissal with prejudice"). This, we argued, amounts to a form of res judicata which should be recognised by foreign courts as triggering the application of the ne bis in idem principle. We further argued that failing to apply the double jeopardy principle to DPAs would amount to a violation of the presumption of innocence and of the right to a fair trial insofar as defendants who entered into a DPA are prohibited from contesting the facts described in the DPA in the course of foreign criminal proceedings relating to the same matter.
The Paris criminal tribunal found that a DPA bars further prosecution before the French courts. The tribunal specifically noted that:
- the defendant was being prosecuted on the same facts as those described in the DPA;
- the DPA – which has a res judicata effect under U.S. law – was concluded within the context of independent, impartial and efficient proceedings which did not aim at enabling the defendant to evade criminal liability in other foreign jurisdictions;
- the defendant complied with its obligations and paid the criminal fine imposed by the DoJ;
- the facts did not violate essential French national interests.
The tribunal further noted that the DPA prevented the defendant from effectively defending himself during French criminal proceedings as a result of the obligation not to contradict its acceptance of responsibility set forth in the DPA, which would amount to a breach of the terms of the DPA. According to the tribunal, this situation amounted to a violation of the presumption of innocence and the right to a fair trial of the defendant.
For all of these reasons, the tribunal decided to apply the double jeopardy rule to a DPA, which is unprecedented in France.
Impact of the decision
Given the lack of coordination among anti-corruption enforcement authorities, the issue of double jeopardy and prosecution deals has become a growing concern amongst companies that are often facing investigations in multiple jurisdictions.
This decision shows that French courts have become increasingly aware of the unfair burden borne by companies that are prosecuted in several jurisdictions and have no choice but to pay significant fines.
One can expect that, assuming the Court of Appeal affirms this decision, it will create an incentive on the part of anti-corruption enforcement agencies to enhance coordination and to develop prosecutorial guidelines to implement the ne bis in idem principle in transnational corruption cases. It might also result in those agencies seeking to accelerate domestic prosecutions with a view to avoid being prevented from proceeding locally due to a foreign plea agreement or DPA. A version of this article first appeared as an eAlert in August 2015
Footnotes17 Paris First instance tribunal – criminal division, 8 July 2013.