SPAIN: An Introduction to Dispute Resolution: Corporate Crime
Individuals’ and legal entities’ duty to cooperate in a criminal process in Spain
In 2010 the Spanish Criminal Code included the possibility to attribute criminal liability for non-natural persons. Since then, the Spanish criminal system, based on the German tradition, faces different challenges to adapt its traditional scheme to the new subject of the criminal process: the legal entity. Our tribunals interpreted differently relevant issues affecting entities’ criminal liability, and a high interpretation from the Supreme Court and the Constitutional Court is still pending. Therefore, it is easy to find grey zones in many aspects of the criminal process dealing with the entity’s liability, corporate compliance and internal investigations.
A key issue is relating to the duty to cooperate with the Justice Administration. Before the criminal liability of legal entities came into force it was clear that individuals could take part in a process (i) as a person under investigation or (ii) as a witness. While the first group was covered by a right of defence which includes a right against self-incrimination, the second group was compelled to cooperate with the Justice Administration. However, this uncontroversial dichotomy has been affected by criminal liability of non-natural persons based on the inner interdependence between the entity and the individuals who perform entities acts.
The Spanish Criminal Procedure Act granted legal entities the right against self-incrimination (art. 409 bis) and the Supreme Court confirmed that legal entities, like natural persons, are protected by fundamental rights including the right of defence and the right against self-incrimination. However, the assessment concerning the obligation to cooperate turns to be more complex when dealing with those individuals linked to the entity by professional engagements. As the non-natural person indeed acts through those individuals, it has been alleged that obligating such individuals to cooperate might void the right of defence of the entity.
As key notes for the foreign reader, the corporate criminal liability in Spain is defined by the following aspects: (i) only those wrongdoings specifically stated in the Criminal Code will trigger the entity's criminal liability; (ii) the entity does not respond vicariously, and its liability is not absolute; (iii) and the entity will respond only for its own misconduct, including for the lack of control over the dependants which allowed the illicit action. Additionally, individuals will respond for its wrongful action which fall under the scope of the specific crime alleged.
Thus an entity might have specific provisions in its compliance program to cooperate with the Justice Administration, but in the end such commitment should be balanced with the right against self-incrimination. It is likely that the entity will cooperate if it can demonstrate control over its dependants avoiding its own liability. After showing compliance and the due diligence taking place, the company will likely provide the accusation with the relevant information about the individuals who are liable for the wrongdoing. On the contrary, it will be less interested in cooperating if it has not enforced a vigorous compliance program. In this regard, a recent case had the first dismissal of proceedings of a non-natural person, a relevant industrial company, in the preliminary investigation phase. The subject of investigation presented before the examining magistrate the existence of an adequate compliance program and cooperated with the investigation, avoiding the damages that would arise from a potential indictment.
The situation becomes more problematic when the party which must cooperate is a natural person linked with the entity by labour or professional engagement as this might void the entity's right of defence. A less problematic situation would cover the case in which the individual is under investigation jointly with the entity. The individual will be covered by their own right of defence so they might decide not to cooperate. On the contrary, their defence might consist of blaming the entity for the misconduct (for instance, alleging ignorance on the wrongdoing, providing the accusation with documents showing the lack of information, training, and control by the entity over its employees, which ease the misconduct). Obviously, if this were the case it will not affect the entity’s right against self-incrimination.
However, if the individual is an entity’s dependant who is not under investigation, it has been alleged that a petition of cooperation from the Court might void the right of defence of the entity. Although our tribunals are denying said possibility some situations remain unclear.
Nevertheless, the Directive (EU) 2019/1937 of 23 October 2019 on the protection of persons who report breaches of Union law (“Whistle-blower Directive”) might bring clarity over such grey zones. Its leitmotif based on protecting individuals who report illegal actions will certainly have an impact on the way our tribunals will interpret upcoming legal problems in the case law. Paragraph 31 protects the individuals “who report threats or harm to the public interest obtained in the context of their work-related activities under the right of freedom of expression”. Therefore, now there is a legal framework which encourages the report of misconducts within an entity not just as a duty to cooperate but as a right to freedom of expression.
It also has been alleged that if those individuals would provide the accusation with documents which belong to the entity this might be breaching the right against self-incrimination of the company. In this regard, paragraph 92 of the Whistle-blower Directive also shows clarity providing immunity for liability to the individual; “where reporting persons lawfully acquire or obtain access to the information on breaches reported or the documents containing that information”. Moreover, “this should apply both in cases where reporting individuals reveal the content of documents to which they have lawful access as well as in cases where they make copies of such documents or remove them from the premises of the organisation where they are employed, in breach of contractual or other clauses stipulating that the relevant documents are the property of the organisation.” Therefore, those arguments against the cooperation of persons related to the entity finds a relevant limitation on this specific regulation which promotes the cooperation.
When it comes to lawyers who work for the entity, this case needs a specific assessment. With respect to in-house counsels, it is alleged there is not an obligation to cooperate as information is covered by the attorney-client privilege. The Directive recognises its regulations do not “affect the protection of confidentiality of communications between lawyers and their clients (‘legal professional privilege’)”. But if the lawyer is subject to the investigation, they will have the right of defence which includes the possibility to cooperate providing the accusation with information or documents they came across during the performance of their professional duties.
Lastly, the case of in-house or external counsels who participate in internal or forensic investigations shows a clear outcome. If the advice provided by the lawyer has the aim to determine the legal position of the company the information and the relevant communications will be confidential, so the lawyer will not have a duty to cooperate with the judicial investigation.