The U.K. Anti-Bribery Act ("the Act")
makes both bribery of a public official and private-to-private
commercial bribery illegal, and imposes a strict liability
offense on commercial organizations that fail to prevent
bribery by persons associated with them. The Act has
extraterritorial effect and applies to transactions of British
subjects or on British territory. "Commercial organizations"
may raise the statutory defense of having "adequate
procedures" in place to prevent bribery, which, if proven,
exonerates the commercial organization from strict liability
for bribery by their "associated persons." Unlike the Foreign
Corrupt Practices Act (FCPA), the U.K. Act does not exempt
facilitation payments ("grease") from coverage. The Act meets
and exceeds Britain's obligations under the Organization of
Economic Cooperation and Development (OECD) Anti-Bribery
Convention, itself too an outgrowth of the U.S. FCPA, seeks to
raise international standards, and relies on "soft law" to do
so in tandem with "hard law."
The British Act is often criticized for
overreach and ambiguity. This article analyzes the genesis of
the British Act, arguing that several of the criticisms of the
British Act are valid but that the Act can be cured of many of
its perceived flaws by reference to common law concepts (e.g.,
agency) or by reference to flanking international instruments
as persuasive evidence of the British legislator's intent
and/or the goals of the Act. The Act is notable in that it
represents the success of hard law crystallizing out of soft
law. The Act is also notable in that it will inevitably
generate more soft law (codes of conduct, contract terms,
managerial guidelines) as companies scramble to set up
adequate procedures. The development of best practices in
business is an example of the use of private law norms to
generate binding law. It could be seen as evidence of
Professor Ralph Steinhardt's Lex Mercatoria hypothesis
Terrorist financing. Corrupted officials.
Money laundering. The terms of trade in the black market are at
times underwritten in blood. Most instances of corruption are
not cases of blood money. [FN1]
There is an entire underground
economy which is bloodless: undocumented workers; sex workers;
penny-ante wagers; and at the riskier end, cigarette smuggling
and drug dealing. What about corruption? Official/unofficial
corruption is an invisible transaction cost to the expense of
businesses; costs aside though, what's wrong with "grease?" [FN2]
The problem with grease payments, even when
oil and blood are not mixed, is that they represent a lack of
We could of course
(re)characterize facilitation payments as a simple "user fee,"
a type of tax levied by impoverished states to finance their
essential services. It would be better for the rule of law for
developing and transition economies to legally transform the
common practice of facilitation payments into overt user fees, e.g.
expedited service fees or administrative fines. Essentially, we
should see a large part of the battle of corruption as the
transformation of illegal transactions into legal ones. From the
prosecutorial side, amnesties for giving up evidence and
deferrals of prosecution (DAPs) are two more tools. Amnesty is
fairly straightforward for whatever reason and to whatever
extent certain persons or transactions are immunized from
prosecution. In a deferral of prosecution, a tool often
permitted in the United States, the prosecutor holds off on
prosecuting the illegal activity so as to give the company the
chance to get its house in order. The logic of amnesties, DAPs,
and plea bargaining is the preservation of scarce prosecutorial
resources and the non-disruption of commerce. It is a matter of
"winding down" the "dodgy deals" and restructuring them into
above the board legality to attain transparency and
is a problem--a transnational
Corruption represents an increased transaction cost, a
distortion of economic signals, a lack of transparency, an
obstruction to free trade, and a source of inefficiencies such
as nepotism and tax fraud. Thus, all states benefit from the
suppression of corruption. Consequently, there is an
ever-greater tendency to criminalize and prosecute bribery both
internationally and domestically, [FN6]
as evidenced by the recent
upswing in Foreign Corrupt Practices Act (FCPA) prosecutions [FN7]
and the passage of the British Anti-Bribery Act. There are
numerous reasons speculated at to explain the increased
but the fact of increased
prosecution of a growing array of norms is there.
The Organisation for Economic Co-operation
and Development (OECD) Convention and the Council of Europe
(COE) Convention seek to create a framework within which
national legislation can and is developed to end corruption.
Accordingly, the Act seeks to implement Britain's normative and
legal obligations under anti-corruption treaties promulgated by
the OECD, the COE, and the E.U. The Act seeks not only to meet
but also to exceed existing international standards, thereby
raising the level of legal transparency and accountability
But the Act's own terms are
vague, casting a broad net, which reaches actors and actions
that might be better regulated through private law relations.
This article proposes: (1) interpretations of the Act that would
cure it of vagueness by presenting concepts around which to
define the ambiguities (e.g.
, fiduciary duty, good faith
and fair dealing) (2) to limit the Act's scope to the types of
actions and actors envisioned in existing international treaty
law, while (3) enhancing the Act's effectiveness by expanding
remedies through equitable concepts such as forfeiture,
procurement bars, and licensing restrictions. This paper exposes
and critiques the British law in order to help make it more
effective. To do so, it must first expose and compare the
foreign laws that inspired the U.K. legislation.
The rise of the norm against bribery under
international law is an example of a soft law approach that
succeeded to form and, over time, implemented a particular norm.
The model of shaping and enforcing an international norm
described here can be applied to other international governance
issues. The experience of the anti-bribery convention could be
applied to the fight against pollution, for example.
A. The Foreign Corrupt
Practices Act (FCPA)
"Genetically," i.e., historically, the most
important legislation in the field of international bribery was
a U.S. law: the Foreign Corrupt Practices Act. This law was
enacted in the wake of the Watergate political scandal and
intended to affirm the United States' commitment to the rule of
law and international human rights. It was not however merely a
case of naΓ―ve altruism or enlightened maintenance of U.S.
hegemony: the U.S. leadership saw, correctly, that murky
overseas illegality represents a hidden transaction cost and a
source of inefficiencies, [FN10]
and that combating
corruption would be of interest to key U.S. allies. This,
however, put the United States at a competitive disadvantage
against other countries that did not (then) outlaw the
(overseas) transactions covered by the FCPA (bribery, [FN11]
essentially). Because commerce is often international and works
as a potential competitive disadvantage to U.S. corporations,
the FCPA was given what at that time was a revolutionary
international scope of application: bribery at home and
abroad would be sanctioned. However, it would take decades of
lobbying for the U.S.-inspired vision to be translated into
international treaty law, and from there, into the laws of other
Ultimately, the FCPA "became the model for similar international
initiatives, most notably the Organization for Economic
Cooperation and Development ('OECD") Convention on Combating
Bribery of Foreign Public Officials in International Business
which explains its interest
1. Bases of Liability under the FCPA
The FCPA prohibits bribery of public
not commercial bribery, i.e.
bribery of private law persons. Today, the FCPA also requires
companies with securities listed on the U.S. stock market to
comply with the accounting provisions of U.S. law. [FN15]
This "books and records" provision of the FCPA [FN16]
is particularly useful [FN17]
and could be taken up in
other legislation (viz, the British Anti-Bribery Act). The books
and records provisions are more useful than the bribery
provisions because they do not require a proof of scienter*1177
standard of proof is lower. Further, by tracking financial
statements, wrongful acts are easier to trace and prove. [FN19]
Since its initial enactment, the FCPA has been amended [FN20]
and strengthened and given greater extraterritorial application;
at the same time, defenses to FCPA liability also have been more
2. Exemptions from Liability under the FCPA
Because of the wide reach of the law,
defenses and exceptions were soon carved out. [FN21]
Payments for "routine governmental action," in other words, the
ministerial rather than sovereign acts of the foreign official [FN22]
such as "facilitating or expediting payment to a foreign
official, political party or party official" intending to
"secure the performance of a routine governmental action," are
exempt from the FCPA. [FN23]
This exception applies only
to "ministerial" duties and not to discretionary decisions,
such as whether "to award new business or to continue business
with a particular party." [FN24]
These are called
"facilitation" payments or "grease" payments and merely
expedite the execution of a right to which one is already
Another exception was also
found: payments, gifts, offers, or promises that are lawful
under the laws of the recipient's country, [FN26]
as well as sums paid in good faith--for example, travel or
lodging expenses in connection with the "promotion,
demonstration, or explanation" of products or services, or the
"execution or performance" of a contract with a foreign
government would be exempted from the FCPA. [FN27]
That is, the sanctioned act must be an instance of "dual
criminality," something illegal both in the United States and
the country (or countries) where the transaction occurred.
3. Remedies under the FCPA
There are several remedies under the FCPA.
The Department of Justice can seek a permanent injunction of the
wrongful activity, [FN28]
companies can be fined, [FN29]
and natural persons may be fined and/or imprisoned. [FN30]
May the bribe itself be recovered? Yes--to the United States
Treasury. "[I]t is unclear whether Congress intended that the
SEC pursue disgorgement in FCPA enforcement." [FN31]
Disgorgement of wrongful profits is an *1178
equitable remedy under the FCPA,
available thanks to the Sarbanes-Oxley Act, [FN33]
even in cases of violation of the books and records provisions
of the FCPA. [FN34]
Disgorgement of wrongful
profits and their forfeiture to the state or even private
parties is an unproblematic issue internationally. [FN35]
But the potential for jurisdictional conflict indicates why we
must be cautious regarding disgorgement as an international
remedy: aside from the difficulty of estimating profits that
arise directly from a bribe, [FN36]
there is the risk of
international conflicts over spoliation of the proceeds of
B. The OECD Convention
Following the enactment of the FCPA, U.S.
pressure led the OECD to draft an anti-bribery convention. [FN37]
The OECD Convention "in large part tracked the normative aspects
of the FCPA." [FN38]
Bribery of foreign public
officials is prohibited under the OECD Convention [FN39]
and bribes paid to foreign officials are subject to seizure and
Corporations may be liable
under the Convention. [FN41]
The OECD Convention permits
extraterritorial jurisdiction [FN42]
application of national anti-bribery laws is unproblematic
provides for extradition, [FN44]
and mandates mutual legal *1179
Article 9(3) is particularly interesting, as it prohibits a
state party from asserting bank secrecy as grounds to refuse to
cooperate in the enforcement of the treaty. [FN46]
These normative positions could, and I think should, be seen as
of interpretive value in construing the British Anti-Bribery
The OECD anti-bribery convention took a
"functional approach," [FN47]
focusing on the effects of
the national legislation rather than the individual rules. [FN48]
That is, the OECD Convention resembles an E.U. Directive,
indicating to state parties what is to be prohibited, but
leaving the means to national law. In sum, slowly, yet
inexorably, an international norm against official bribery has
Thus, several states have enacted anti-bribery legislation
pursuant to the OECD convention. [FN50]
C. The WTO
The surprisingly successful "soft law"
approach taken by the OECD [FN51]
can be contrasted with the
law/no law approach taken by the WTO. The WTO has not undertaken
anti-bribery legislation. [FN52]
This is because soft law is
regarded with suspicion and skepticism at the WTO. [FN53]
The fear is that developing WTO soft norms would undermine the
existing WTO hard law [FN54]
because soft law norms could
not be enforced, [FN55]
which would reduce WTO
legitimacy. Thus, to date, the OECD, and not the WTO, has been
the principle force for the formation of the norm against
*1180 D. The Counsel of Europe (COE)
Following the FCPA model, the Council of
Europe Convention obliges State Parties to create offenses in
their national law for fraudulent accounting practices. [FN56]
The COE Convention permits State Parties to exercise
extra-territorial jurisdiction over offenses on the basis of
nationality or territoriality. [FN57]
Article 17(3), for its part,
imposes a duty to extradite or prosecute, which is becoming ever
more clearly a general principle of international law: states
must prosecute or extradite criminals subject to their
jurisdiction--aut dedere aut judicare. [FN58]
The COE convention permits criminal or
for legal persons in accordance with national law [FN59]
corporations under German civil law, e.g.,
cannot commit crimes
, but can be in (delictual)
violation of administrative provisions. Corporate liability
shall not exclude the possibility of civil liability of natural
culpable persons. [FN60]
Article 21 of the COE
convention mandates cooperation between national authorities. [FN61]
E. Common Features of the
Because the laws described all share a common
lineage and logic, they share various features. These are
synoptically described below to illustrate the state practice of
the forming customary norm against bribery of public officials.
1. Corporate Criminal Liability--Permitted, Not Mandated
The conventions mandate that corporations be
held liable in accord with national law. The civil liability of
corporations here is not at issue--that is unproblematic. What
is less clear, internationally, is whether and how a corporation
may be held criminally liable, e.g.
as an accomplice or
even principal. Germany and most States using Germanic civil law
do not recognize corporate criminal liability for the simple and
logical reason that corporations, unlike natural persons, are
incapable of moral culpability. [FN62]
Of course, corporations in
Germanic civilianist jurisdictions may be liable in tort and for
administrative violations (Ordnungswidrigkeiten
Accordingly, the international conventions mandate either civil
or criminal sanction, leaving the precise characterization of
the sanction as civil, criminal, or some mix to national law.
Because the common law does recognize corporate criminal
application of common law legislation subjects foreign
corporations to criminal liability. Criminal liability of
corporations is thus an international *1181
and holding corporations criminally liable for violations of
international law, for example under the Alien Tort Statute, is
consistent with customary public international law.
2. Dual Criminality
In the context of extradition, "double
criminality" (also known as "dual criminality") is the
principle that the criminal act which is the basis for the
desired extradition must be a crime both in the state asserting
jurisdiction and in the state where the crime occurred. [FN65]
States which apply a principle of "double criminality" refuse
to extradite unless there is "double criminality." [FN66]
Corporations cannot be extradited, so the issue of dual
criminality normally does not arise in the context of corporate
crimes. This procedural fact obviates the potential problem of
determining whether the civil violations of corporations in
jurisdictions which refuse to impute criminal liability to
corporations satisfy the dual criminality requirement for
extradition. But, because corporations can be liable for bribery
under national or international law, and because some states
permit extraterritorial application of their anti-bribery
statutes only where the principle of dual criminality is
satisfied, the theoretical problem reappears. The solution in
national law is to assimilate the civil law violations of
corporations under Germanic civilian law to the criminal
liability of corporations in common law jurisdictions for the
application of the test to determine whether the act is wrongful
in both (or all) relevant jurisdictions. [FN67]
3. Cross Border Cooperation
The various national and international
instruments have extraterritorial effect to remedy international
corruption. This leads to the issue of international
cooperation, which has been increasing in recent years. [FN68]
Today, informal agreements exist to avoid the problems of double
jeopardy and multiple prosecution [FN69]
as well as to ensure
transfer of (confidential) information and cooperation between
national law enforcement.
*1182 4. Taxation--Non
deductibility of Corruption Payments
One real point of progress made by the
conventions is the rise of a norm that corruption payments will
not be deductible from taxable income. Article 12.4, UNCAC
provides that "Each State Party shall disallow the tax
deductibility of expenses that constitute bribes." [FN70]
Similarly, the OECD recommends that tax deduction of corruption
payments be disallowed. [FN71]
It is also worth noting that
tax fraud and bribery often go hand-in-hand. [FN72]
The Conventions make bribery non-deductible in order to root out
tax fraud as well as bribery.
III. The U.K. Anti-Bribery Act ("the Act") [FN73]
Against this background, Britain recently
enacted an extensive anti-bribery statute in order to meet and
exceed the OECD Convention's standards. The British legislation
was likely, in part, a response to the OECD's report calling on
the United Kingdom to enact effective anti-corruption
The British statute, in sum,
attempts to govern not only bribery of public officials but also
commercial bribery of private actors inter se (as, for example,
where a person bribes another person to breach their fiduciary
duty to their employer). The British statute sanctions not only
the wrongful acts of physical, i.e. natural persons but also
those of corporations. [FN76]
Furthermore, and perhaps
problematically, the British law applies a strict liability
regime to corporate liability. [FN77]
Like the FCPA, [FN78]
the British law applies extraterritorially. [FN79]
Unlike the FCPA, the British statute does not provide an express
exemption for liability for facilitation payments. I do not
think one could be fairly implied from the terms of the statute,
but some judges are creative sometimes.
The Act includes controversial, even
questionable, bases for liability. If I read this statute
correctly, it imposes extraterritorial strict liability for
corporate commercial bribery. *1183
This strict liability of the
corporate body for the wrongful act of its "associated person"
can be avoided if the corporation had "adequate procedures" in
place to prevent the wrongful act. The "adequate procedures"
defense had not arisen in any of the international instruments
or the FCPA so far as I have seen, but neither had strict
liability. In addition to controversial theories, which reach
extraterritorially to corporate actors and include strict
liability, the Act also suffers from ambiguities. None of those
weaknesses are fatal, but they will require much judicial
interpretation to be cured.
Despite the flaws--ambiguity and
overreaching, the Act is a "hopeful monster." First, the
legislation represents another example of the success of
functionalist method. [FN80]
Second, the statute
represents an example of the power of non-binding soft law as a
"strange attractor" for obligatory
A. Soft Law: A Strange
Attractor for the Accretion of Hard Law
International anti-bribery legislation is an
example of effective transnational governance. How exactly did a
international norm against the bribery of public
officials arise? The approach taken follows: First, normative
goals with few or no enforcement mechanisms, but which may be
used to interpret other laws and/or as persuasive evidence of
binding law, are established at the global or regional level.
Second, these normative goals are then taken up and implemented
via regional, national, and even private actors (e.g.
corporate codes of conduct). Both private law actors
(corporations, NGOs) and public law actors (states,
international organizations) are used to establish the norm and
to attribute greater and greater binding force to it over time.
In sum, the persuasive and desired normative goal--here,
transparent government, which is desired in fact by all honest
persons, is attained gradually by ratcheting standards upward
over time. [FN81]
The British Act attempts to further that
process along by addressing commercial bribery and also by
giving a hard law role to soft law actions of non-state actors.
The corporate defense of adequate procedures is nothing other
than an implied command to companies to form soft law in this
field, soft law which will influence not merely the
interpretation of hard law but also its application. To me, the
Act represents the efficacy of soft law transnational governance
and this model of international governance should be understood
for it may have applications in many other fields.
B. The Terms of the Act
The statute first defines a "general bribery
--bribing another person for
improper performance. [FN83]
The statute then [FN84]
defines offenses relating to being bribed. [FN85]
taking or offering a bribe is covered under the general offense
which reaches commercial bribery, sometimes referred to as
private to private bribery. Comparatively speaking, commercial
bribery is recognized in some form in most U.S. states, though
it is generally not addressed in the international conventions
or, so far as I understand, in the FCPA. The United Kingdom
seeks to raise the international standard on that point.
"However, unlike bribery involving public officials, the logic
of criminalizing bribery between commercial entities is
sometimes questioned." [FN86]
The two "general offenses"--taking or
receiving a bribe--reach commercial i.e. private actors. Do they
also reach bribery of officials? The general offenses do not
appear to explicitly include or exclude bribery of public
officials. Structurally, having defined general offenses which
clearly include at least commercial bribery, the statute then
defines "specific offenses," starting with the specific offense
of "bribery of foreign public officials." [FN87]
That creates the argument that the structure of the legislation
excludes bribery of public officials from the general offenses,
which is an odd result, because the OECD Convention that the
statute effectively implements is aimed only at bribery of
The second, and perhaps most controversial
specific offense, is also the last offense defined in the Act:
"failure of commercial organisations to prevent bribery." [FN88]
There, strict liability may be imputed to the corporation for
the wrongful act of an associated person. The obvious question
is who is an "associated person"? Directors? Officers?
Employees? Likely all three. What about shareholders? Spouses?
Children? Subsidiaries? Subcontractors? The statute on its own
terms doesn't answer who is an "associated person." Happily, we
can well imagine the eventual judge drawing on principles of
tort liability (respondeat superior, vicarious liability,
imputed liability), contract (privity), capital markets law
(corporate insiders), and corporate criminal law to determine
with some predictability who is or is not an "associated
person." I expect "associated person" will be defined as
employers, directors, shareholders, persons in privity to those
groups, general partners, probably also silent partners, wholly
owned subsidiaries, probably also majority owned subsidiaries,
joint venture partners, but probably not subcontractors; frankly
I have no idea if shareholders or silent partners should be
treated as associated persons or, if so, when. The court may
well be forced to develop a center of gravity approach of some
kind under which sometimes a shareholder will be an "associated
person" and at other times will not. Regardless of what the
court does in fact do with this undefined term, judicial
interpretation can credibly cure this flaw because of the array
of flanking corporate laws from which to draw analogies.
However, one can imagine this Act leading to the use of
subcontractors, and subsidiaries to outsource graft, as similar
outcomes resulted from the Alien Torts Statute. [FN89]
As noted, the Act does not exempt
facilitation payments. But, bribes paid by the military or
intelligence services are exempted. [FN90]
There the difficult issue is
the use of "Her Majesty's Service" to obtain not vital
intelligence about impending attacks but market share *1185
sale of British Aerospace products [FN91]
masquerading as security. The problem of corruption in military
contracting is a matter for domestic British law to sort
through. Here, however, the equitable remedy of procurement bars
is called to the reader's attention.
With crafty interpretation, the judiciary
might somehow reach a judicial (not equitable: equity does not
exonerate otherwise wrongful acts--"he who seeks equity must do
equity") solutions. Perhaps the judiciary will find an
exemption for facilitation payments, or an exemption for de
minimis payments? Whether and how the court reaches such
exemptions cannot be predicted either from the statute or other
laws with which this author is familiar. A good argument might
be to compare the U.K. Anti-Bribery Act to other similar laws
overseas which do exempt "grease" payments as persuasive
evidence that the British legislator did not intend to capture
such conduct because it did not specifically say it would do so
and because capturing such conduct might lead to conflicts of
jurisdiction or between British law and the U.K.'s international
What is clear is that the Act covers
commercial bribery. Commercial bribery is one (the only?) basis
for the general claims. [FN93]
bribery is controversial because commercial bribery is not
defined internationally, so far as I have seen, though it can be
found in the laws of some of the federated states of the United
States. It is also clear that commercial organizations are
(strictly!) liable for failure to prevent bribery by (not of)
persons associated with it (was that the result of bad
drafting?). Commercial bribery is not well defined in the
statute. I would argue that the essence of commercial bribery is
an economically induced breach of fiduciary duty
are my own terms. Perhaps penetrating legal research would find
a better rationale? I do think the terms I suggest reach the
gravamen of the wrong. On its own terms, the Anti-Bribery Act
centers the wrong on obtaining or retaining commercial advantage
and/or business. [FN95]
Just about all company
actions aim at commercial advantage and/or obtaining and/or
retaining market share. Thus, business advantage is not the best
focal point for capturing the wrongful act because that test
captures almost all conduct of a commercial enterprise.
Commercial organizations may assert the affirmative defense to
an accusation of failing to prevent bribery by (not of) persons
associated with the organization that the commercial
organization had "adequate procedures" in place to prevent the
wrongful act of the associated person. [FN96]
The Act does not define "adequate procedures." But, here at
least, the judge can look at the vast literature and even case
law on corporate governance. So for example, we can readily
envision a corporate code of conduct, corporate trainings, and
contractual provisions in the company's business practices. In
fact, the soft-law aspects of the Act are the most interesting
and innovative aspect of the Act. The Act is doing some very
interesting things. It is essentially imposing a policing
function on corporations--after all, they are the ones acting,
the ones closest to the transactions. The Act is also relying on
soft law measures to form hard law. [FN97]
Consequently, most law and
consulting firms are *1186
advising their clients to
undertake compliance measures such as audits and trainings. [FN98]
Similar "due diligence" actions such as Corporate Codes of Good
Conduct (COGCs) and management trainings were (and are) also
recommended with respect to the U.S. FCPA, [FN99]
even though the FCPA does not provide for liability on a theory
of commercial bribery or strict liability.
IV. Critique of the British Law
A. Actus Reus
1. Extortion versus Bribery
As noted, the Act is vague: as written, the
Act potentially covers so much conduct that extortion could well
be included into the general offenses. Thus, it would be
sensible for the judiciary to interpret the statute to exclude
conduct which would be characterized as extortion. Bribery may
be distinguished from extortion in that extortion relies on
This illustrates that some
of the ambiguity in the Act can be cured by interpreting the Act
in light of flanking criminal legislation so as to delimit the
exact extent of the Act.
2. Commercial Bribery
The FCPA and the international conventions
surveyed do not criminalize commercial bribery. Criminalization
of commercial bribery does not conflict with the terms of the
conventions but is not mandated by them. Trying to draw on the
international instruments described here will not help the
British judge define commercial bribery, nor will looking to the
FCPA. Nor is commercial bribery coherently defined in the Act. I
suggest centering the definition of commercial bribery on the
idea of some breach of fiduciary duty and/or a breach of the
duty of good faith and fair dealing
. However, while the
applicability of commercial bribery can be rendered coherent in
this way, it cannot be interpreted away by any judge, no matter
how interventionist or activist she may be. The challenge for
human rights and rule of law advocates is to figure out how best
to generate business practices which will ultimately define just
what is and isn't commercial bribery. To that extent, one can
hope that NGOs will promulgate model codes of business conduct.
B. Mens Rea
The U.K. statute applies "strict liability"
to companies. [FN101]
It would be prudent to
interpret the statute as applying by implication there from
specific intent to natural persons; that distinction is
justified because natural persons are capable of being
imprisoned and should enjoy the higher standard of proof (beyond
reasonable doubt) of criminal defendants. This would be the
interpretation moreover that one should expect from the court at
as to criminal prosecutions--in contrast to civil prosecutions,
which would likely be based on an ordinary standard of proof
(likelier than not).
C. Possible Remedies
1. Procurement and Licensing Restrictions
The problem with the British Act is that it
overreaches, taking into account "commercial" bribery and
strict liability for corporations (extraterritoriality is not so
problematic but elicits howls, too). Further, the Act's
substantive offenses and defenses are poorly defined. Judicial
interpretation can, should, and likely will clarify the exact
contours of the legislation. But, the Act does not address two
remedies which would be very effective: procurement bars and
license revocation. A procurement bar is the refusal of a State
to enter into business contracts with a corporation that has
violated the law. [FN102]
A licensing restriction is
the suspension or revocation of a license, e.g.
practice law or medicine, resulting from the wrongful conduct of
the license holder. Courts could and should interpret the
statutes in question where possible to find such remedies, for
they would be effective. [FN103]
2. A Private Cause of Action
The U.K. Act does not, and should not,
create a private law cause of action unless and until it
modifies its substantive definitions of the covered actions and
actors to create adequate legal certainty to avoid a flood of
3. Disgorgement (forfeiture)
Because the United Kingdom is a common law
country equitable remedies are also generally available. So, in
theory, a British court could order disgorgement of wrongful
profit. However, the remedy of disgorgement is problematic
because measuring the profits resulting from a bribe will at
times be difficult or impossible, which is one reason to be
hesitant to use disgorgement as a remedy to cases of
international bribery. [FN104]
extraterritorial forfeiture could lead to overly zealous
enforcement by prosecutors seeking to increase their budgets as
well as to jurisdictional conflict. [FN105]
*1188 D. Reforming the British Statute
through Greater Conceptual and Terminological Clarity
It is unproblematic that the British general
offense reaches both the bribed and the briber. But, it is
somewhat problematic that the British Act reaches commercial
bribery because the British statute defines the offenses too
vaguely. A more exacting and doctrinally coherent analysis would
look at corruption as a variety of offenses: patronage/nepotism;
bribery; misappropriation of funds (embezzlement); breach of
fiduciary duty; unlawful and immoral conduct (e.g.
illegal drugs, prostitution); betrayal of public trust; and
political corruption. [FN106]
Carr's groundbreaking work
in defining corruption with specificity has not been completed,
but legal scholars can and should try to organize thinking about
corruption around the above mentioned concepts, and then seek to
impose coherence onto the vague British Anti-Bribery Act
thereby. Faced with an ambiguous statute but clear scholarship,
judges could complete the meaning of the statute by referring to
scholars' works as persuasive evidence of the (internationally
V. Overall Conclusions
Although the U.K. Anti-Bribery Act is poorly
crafted, it does raise international standards because it
effectively forces corporations to institute effective
procedures to prevent bribery, such as corporate codes of
conduct, internal trainings, contractual provisions, and "triple
bottom line" auditing. The Act also raises the international
standard by including facilitation payments and commercial
bribery. But, because the statute casts its net so broadly, its
attempt to raise the standard internationally may miss the mark.
The extraterritorial character of the Act is not problematic.
The vaguely defined predicate acts may be problematic but can be
interpreted by courts so as to create adequate legal certainty
for business, especially given the defense such of effective
procedures. Doubtless, the Act will be amended, just as the U.S.
FCPA was; perhaps facilitation payments will be exempted, or
even commercial bribery. But, for now at least, companies are
under the strongest pressure to institute procedures and
standards so as to have the defense of adequate procedures in
the event one of their employees breaks the law and should
recast any requested facilitation payment contractually. This
paper has tried to propose some interpretations of the Act which
would reduce the uncertainties of the as-yet uninterpreted and
unenforced law. Hopefully thereby it contributes to creating
transparency and the rule of law in international commerce.
[FN1]. "While there is no doubt that
petty corruption in the form of bribes to obtain services such as
a passport or a driving licence from government officials is
prevalent in many developing countries and injurious to trust in
the government and the rule of law, it is corruption at the grand
level in the form of bribes by businesses to domestic and foreign
public officials that is seen as causing the greatest harm to a
country in terms of economic growth and high levels of poverty."
Indira Carr & Opi Outhwaite, The OECD Anti-Bribery
Convention Ten Years On, 5 Manchester J. of Int'l Econ.
L. 3, 4 (2008), available at http://epubs.surrey.ac.uk/578/1/fulltext.pdf.
[FN2]. Facilitation payments are
payments made to government officials not to influence a sovereign
decision but to obtain execution of a right to which the payer is
already entitled; they are also called "grease payments." See
generally, Christopher F. Dugan & Vladimir Lechtman, Current
Development: The FCPA in Russia and Other Former
Communist Countries, 91 Am. J. Int'L L. 378,
[FN3]. "The House of Representative
makes clear such activities 'cast a shadow on all US companies.
The exposure ... can damage a company's image, lead to costly
lawsuits, cause the cancellation of contracts, and result in the
appropriation of valuable assets overseas."" Carr &
Outhwaite, supra note 1, at 7.
[FN4]. "Although many commentators
may find it unsurprising that some multinational firms vigorously
pursue corruptly influenced contracts--or are at least complacent
in accepting such contracts--another view holds that such an
account is too cynical. These optimists claim that corruption is
inefficient and argue that moral signals from the countries that
have prohibited corruption by statute can also motivate firms.
Under such a view, most multinational corporations should endeavor
to comply with the law." David C. Weiss, The Foreign
Corrupt Practices Act, SEC Disgorgement Of Profits, and the
Evolving International Bribery Regime: Weighing Proportionality,
Retribution, and Deterrence, 30 Mich. J. Int'l. L. 471,
[FN5]. "The US recognised that
bribery of foreign public officials was not simply a US problem
but a universal one. In aggressively promoting the adoption of
similar legislation in other industrialised countries the US
sought to ensure a level playing field for competing businesses
and to increase market integrity and stability. The FCPA is
legislation that has economic interests at its heart. It took
until 1997 for the US pressure to bear fruit and that came in the
form of the OECD Convention." Carr & Outhwaite, supra
note 1, at 7.
[FN6]. See Weiss, supra
note 4, at 473.
[FN8]. Id. at 483.
[FN9]. "Going beyond, for example,
the US Foreign Corrupt Practices Act, it has been said to set a
new 'gold standard" in anti bribery legislation." Andrew Ottley
& Chris Jefferis, Bribery Act 2010: Briefing and Guidance,
Ince & CO.,
(Oct. 2010), http://www.incelaw.com/documents/pdf/Strands/Commercial-Disputes/bribery-act-2010.pdf.
[FN10]. "U.S. trade officials
clearly recognized that bribery and corruption can block and
distort international economic transactions." Kenneth W. Abbott,
Rule-Making in the WTO: Lessons from the Case of Bribery and
Corruption, 4 J.
Int'l Econ. L. 275, 286 (2001).
[FN11]. See 15 U.S.C. §§
[FN12]. The United States introduced
FCPA, then pressured OECD and the U.N., with little success, for
10 years. Abbott, supra note 10, at 283.
[FN13]. Thomas F. McInerney, The
Regulation of Bribery in the United States, 73 Int'l R. of Penal L.
81, 82 (2002), available at http://www.cairn.info/revue-internationale-de-droit-penal-2002-1-page-81.htm.
[FN14]. See 15 U.S.C. §§
[FN15]. See § 78m.
[FN16]. § 78m(b)(2)(A).
[FN17]. "The accounting and internal
controls provisions together constitute one of the most effective
weapons regulators possess in enforcing the FCPA. While these
provisions are only enforceable by the SEC on a civil basis, and
apply only to companies with securities registered under the
Exchange Act (rather than all persons' as do the anti-bribery
provisions), it is much easier for regulators to prove their
case." McInerney, supra note 13, at 87-88.
[FN18]. "The anti-bribery provisions
of the FCPA, unlike the books and records provisions, require
scienter for liability to attach. The definitions in the statute
indicate that 'knowing" conduct exists if (i) a person is aware
that they are engaging in certain conduct, that such circumstances
exist, or that the result is substantially certain to occur, or
(ii) the person has a 'firm belief" that such circumstance exists
or is substantially certain to occur." Id. at 84.
[FN19]. Id. at 87-88.
[FN20]. See The
International Anti-Bribery and Fair Competition Act of 1998, 112
Stat. 3302 (1998) (amending the Foreign Corrupt Practices Act).
U.S.C. § 78dd-1(c).
[FN22]. § 78dd-1(b).
[FN24]. 15 U.S.C. § 78dd-1(f)(3)(B).
[FN25]. See Dugan &
Lechtman, supra note 2.
[FN26]. 15 U.S.C. § 78dd-1(c)(1); 15
U.S.C. § 78dd-2(c)(1).
[FN27]. McInerney, supra
note 13, at 85.
U.S.C. § 78dd-2(d); 15
U.S.C. § 78dd-3(d).
[FN29]. § 78dd-2(g).
[FN30]. § 78dd-3(e).
[FN31]. Weiss, supra note 4,
[FN32]. "The SEC can support its
pursuit of disgorgement under broad equitable principles or
statutory authorization. Disgorgement is an equitable concept that
has existed in Exchange Act jurisprudence for decades. The first
case using the word 'disgorgement" for violations of Rule 10b-5
stated: '[I]t is simple equity that a wrongdoer should disgorge
his fraudulent enrichment." While disgorgement can serve
deterrence purposes, it is intended not to compensate the wronged
party or to serve as a complete stand-in for the deterrent effects
of fining, but to recover the benefits of a wrongful act. Although
a longstanding equitable tool, disgorgement was used relatively
sparingly by the SEC until the passage of SOX, which is also, now,
a part of the Exchange Act." Id. at 485.
[FN33]. See Sarbanes-Oxley
Act of 2002, 116 Stat. 745 (2002) (codified in scattered sections
of 11, 15, 18, 28 and 29 U.S.C. (2000 & Supp. IV 2004)).
[FN34]. Weiss, supra note 4,
[FN35]. Id. at 492.
[FN36]. Id. at 499.
[FN37]. "The prime mover for the
OECD to take steps to combat corruption of foreign public
officials was pressure applied by the United States ... which took
almost two decades to bring about the intended result." Carr
& Outhwaite, supra note 1, at 6.
[FN38]. McInerney, supra
note 13, at 89.
[FN39]. Convention on Combating
Bribery of Foreign Public Officials in International Business
Transactions and Related Documents, Nov. 21, 1997, 37 I.L.M. 1
(1998), available at http://www.oecd.org/dataoecd/4/18/38028044.pdf
[hereinafter Convention on Combating Bribery].
[FN40]. "Each implementing State
must also 'take such measures as may be necessary to provide that
the bribe and the proceeds of the bribery of a foreign official,
or property the value of which corresponds to that of such
proceeds, are subject to seizure and confiscation or that monetary
sanctions of comparable effect are applicable."" Weiss, supra
note 4, at 480.
[FN41]. Art. 2 artificial persons
liability states: "Each Party shall take such measures as may be
necessary, in accordance with its legal principles, to establish
the liability of legal persons for the bribery of a foreign public
official." Convention on Combating Bribery, supra note
[FN43]. "Belgium, for example,
prohibits foreign bribery under a universal jurisdiction statute
that applies to 'any person" 'who is neither a Belgian national
nor has their principle place of residence in Belgium." Brazilian
authorities have asserted that an offense needs only to have
'touched" Brazilian territory for jurisdiction to be valid."
Weiss, supra note 4, at 493.
[FN44]. Convention on Combating
Bribery, supra note 39.
[FN46]. "A Party shall not decline
to render mutual legal assistance for criminal matters within the
scope of this Convention on the ground of bank secrecy." Id.
[FN47]. Carr & Outhwaite, supra
note 1, at 9.
[FN48]. "Practices and informal
rules are part of this approach as well as other aspects of the
legal system taking over ancillary functions. Therefore the focus
of comparison would lie on overall effects produced by a
country's legal system rather than the individual rules." Id.
at 10 (emphasis added).
[FN49]. A recent study on
enforcement of anti-corruption laws by OECD countries "showed slow
but steady movement toward more proactive government enforcement
of anti-corruption laws over the first decade of the OECD
Convention. In the past couple of years, the Bush and now Obama
Administrations have substantially ratcheted up the US
Government's pursuit of all manner of cases in the anti-corruption
space." Andrea Bonime-Blanc, The UK Anti-Bribery Act: How
Global Companies Should Prepare, Ethical Corp., Sept.
14, 2010, http://www.ethicalcorp.com/content.asp?contentid=7075.
[FN50]. For a list of national
legislation implementing the OECD Anti-Bribery Convention, see
OECD Anti-Bribery Convention: National Implementing Legislation,
(last visited Oct. 27, 2010).
[FN51]. "Discussions in the OECD and
WTO were based on very different conceptions of the process of
legalization. In the OECD, the U.S. pursued a 'transformational"
soft law strategy that over five years-1993 to 1997-produced a
legally binding Convention. The U.S. undoubtedly adopted a
gradualist strategy in this case because an immediate move to hard
law seemed politically infeasible, but the approach was highly
congenial to the OECD, which acts through a variety of soft
(recommendations) and hard (decisions, conventions) legal
instruments." Abbott, supra note 10, at 290.
[FN52]. Id. at 275-96.
[FN53]. "In the WTO, in contrast,
negotiators from the U.S. and other developed country governments,
at least, perceived only two possible outcomes: a hard, legally
binding multilateral agreement (whether on corruption, market
access or TGP) or no action at all." Id. at 290.
[FN54]. "The focus on hard law was
not simply a matter of tactics on this particular issue. It
reflected a deep-seated understanding of how the WTO operates and
should operate. The conviction that the WTO is an organization
that deals only in hard law was most clearly revealed in debates
over the applicability of the WTO dispute settlement mechanism to
[FN55]. Id. at 291.
[FN56]. Criminal Law Convention on
Corruption, Jan 27, 1999, E.T.S. 173, available at http://conventions.coe.int/treaty/en/treaties/html/173.htm
[hereinafter Criminal Law Convention].
[FN57]. Id. art. 17.
[FN58]. See e.g., R v. Bow St.
Metro. Stipendiary Magistrate And Others, Ex Parte Pinochet
Ugarte (No. 3),  1 A.C. (H.L.) 147, 154.
[FN59]. Criminal Law Convention, supra
note 56, art. 18.
[FN60]. Id. art. 18(3).
[FN61]. Id. art. 21.
[FN62]. See generally
Guenter Stratenwerth, Strafrechtliche Unternehmenshaftung, in Festschrift fuer
Rudolf Schmitt zum 70. Geburtstag 295-310 (K. Geppert, J. Bohnert
& R. Rengier eds., 1992).
[FN63]. Lennard's Carrying Co.
Ltd. v. Asiatic Petroleum Co., 
A.C. 705, 713 (H.L.) (Viscount Haldane; 'directing
mind" principle; wrongful act of corporate director attributed to
[FN64]. "Given the many approaches
to imputing fault on the part of a company it is unfortunate that
the OECD has not put forward an autonomous provision to address
this issue." Carr & Outhwaite, supra note 1, at 16.
[FN65]. "It is a fundamental
requirement of international extradition that the crime for which
extradition is sought be one provided for by the treaty between
the requesting and the requested nation. The second determination
is whether the conduct is illegal in both countries." Heilbronn
v. Kendall, 775
F. Supp. 1020, 1023 (W.D. Mich. 1991).
[FN66]. "A broad interpretation of
the requirement of dual criminality is followed: The law does not
require that the name by which the crime is described in the two
countries shall be the same, nor that the scope of the liability
shall be coextensive, or, in other respects, the same in the two
countries. It is enough if the particular act charged is criminal
in both jurisdictions. The fact that a particular act is
classified differently or that different requirements of proof are
applicable in the two countries does not defeat extradition." Id.
[FN67]. One can readily imagine
situations where the wrongful act occurred in several
jurisdictions, or where the national is subject to multiple
states' jurisdiction. In the corporate context the struggle
between the "real seat theory" versus the "incorporation theory"
to determine the nationality of the corporation recurs here, too.
See, e.g., Kilian Baelz & Teresa Baldwin, The End
of the Real Seat Theory (Sitztheorie): the European Court of
Justice Decision in Ueberseering of 5 November 2002 and its
Impact on German and European Company Law, 3 German L. J. 12, available
[FN68]. Siri Schubert & T.
Christian Miller, At Siemens, Bribery Was a Line Item, N.Y. Times, Dec. 20,
[FN69]. Weiss, supra note 4,
[FN70]. United Nations Convention
Against Corruption art. 12.4, Oct. 31, 2003, 2349 U.N.T.S. 41
[FN71]. OECD, Recommendation of
the Council on the Tax Deductibility of Bribes to Foreign Public
Officials, at 2, [C(96)27/FINAL] (Apr. 11, 1996).
[FN72]. "In our experience, it is
during interactions with foreign tax officials (both direct and
indirect tax authorities) that many bribes take place." David
Lawler, The Bribery Bill-What Does it Mean For UK plc?, European Union Anti-Bribery
Blog, (Jan. 12, 2009), http://www.antibriberyblog.eu/2009/12/the-bribery-billa-non-technical-summary/.
[FN73]. Throughout this section
quotation marks are used to indicate the exact terms of the Act,
not as "scare quotes."
[FN74]. See OECD Group Demands
Rapid UK Action to Enact Adequate Anti-Bribery Laws, OECD,
Oct. 16, 2008, http://www.oecd.org/document/8/0,3343,en_
[FN75]. "[T]he Bribery Act makes it
an offense to receive, as well as give, a bribe; bribery of
private individuals and companies is criminalized; there is no
need to prove corrupt intent; there is a strict liability
corporate offense for failing to prevent bribery; there is no
exemption for facilitation payments; and the extraterritorial
reach has a broader impact for companies and individuals." The
UK Bribery Act 2010: What US Companies Need to Know, DLA Piper, June 1,
[FN78]. Lawler, supra note
[FN79]. Bribery Act, 2010, c. 43, §
[FN80]. Functionalism seeks to
attain peace by pieces. Namely, specialist agencies defined around
particular problems seek to develop and apply expert knowledge to
apply to isolated individual disputes. See, e.g., Eric Engle, Lex Naturalis, Ius
Naturalis: Law as Positive Reasoning & Natural Rationality
36-38, 154-155 (2010).
[FN81]. OECD, Recommendation of the
Council on Tax Measures for Further Combating Bribery of Foreign
Public Officials in International Business, at 1-2, [C(2009)64]
(May 25, 2009) (non-binding norm; merely recommending state
parties to take up binding national legislation).
[FN82]. Bribery Act, 2010, c. 43, §
[FN84]. Bribery Act § 2.
[FN86]. McInerney, supra
note 13, at 104.
[FN87]. Bribery Act § 6.
[FN88]. § 7.
[FN89]. See Eric Engle, U.S.
Corporate Liability for Torts of Foreign Subsidiaries, 23 Corp. Counsel Rev. 90
(2004). See also Eric Engle, The Alien Tort Statute and the Torture
Victim's Protection Act: Jurisdictional Foundations and
Procedural Obstacle, 14 Willamette J. Int'l L. &
Disp. Resol. 1, 8 (2006).
[FN90]. Bribery Act, 2010, c. 43, §
[FN91]. David Leigh & Rob Evans,
BAE Accused of Secretly Paying 1bn to Saudi Prince, Guardian, June 7, 2007,
[FN92]. Then again, maybe not; your
guess is as good as mine, maybe better.
[FN93]. Bribery Act, 2010, c. 43, §
[FN94]. § 7(1)(a).
[FN95]. § 7(1)(b).
[FN96]. § 7(2).
[FN98]. See, e.g., Gary
DiBianco & Perry Madden, U.K. Parliament Enacts Landmark
Anti-Bribery Law, Skadden,
Apr. 1, 2010, http://www.skadden.com/Index.cfm?contentID=51&itemID=2045.
[FN99]. See, e.g., Eric
Engle, Corporate Social Responsibility (CSR):
Market-Based Remedies for International Human Rights
Violations?, 40 Willamette
L. Rev. 103 (2004).
[FN100]. McInerney, supra
note 13, at 99.
[FN101]. See id.
[FN102]. "In many states,
corporations that engage in bribery of public officials may be
barred from receiving further government contracts for up to a
three year period. Such statutes typically specify that subject to
reasonable notice and an opportunity for a hearing, bidders,
offerors, or contractors including, in some cases, natural persons
such as partners, members, officers, directors, or responsible
managing officers of such entities, can be excluded from public
contracts based on inter alia a criminal conviction in
relation to obtaining a public or private contract or a conviction
of bribery under state or federal law. Constitutional challenges
to such statutes have generally failed." Id. at 103-04.
[FN103]. "As with bars from
procurement, many states make bribery convictions grounds upon
which licenses may be withheld. The types of licenses to which
such prohibitions apply range from licensed professional
counselors to dentistry. Unlike the procurement bars discussed
previously, the licensing restrictions can be far more onerous as
they usually are irrefutable and presumably last a lifetime." Id.
[FN104]. Weiss, supra note
4, at 502-03.
[FN105]. "[W]hile foreign
enforcement is in its relative infancy, the recent growth in the
number of these actions is a trend that will continue and that may
eventually create a risk of redundant enforcement." Id.
[FN106]. See Indira M.
Carr, Fighting Corruption Through Regional and International
Corruption: A Satisfactory Solution?, 15 Eur. J. Crime, Crim. L. Crim.
Just. 121 (2007).