Criminal Liability of Companies. KUWAIT Abdullah Kh. Al- Ayoub & Associates

Transcription

1 Criminal Liability of Companies KUWAIT Abdullah Kh. Al- Ayoub & Associates CONTACT INFORMATION Jasmin Kohina Abdullah Kh. Al- Ayoub & Associates Souk Al-Kabir Building, Block B", 9 th Floor Fahed Salem Street P.O.Box 1714 Safat Kuwait Tel: / Fax: ayoubakh@kem.net 1. General 1.1. Can a company be prosecuted in your jurisdiction in a similar way as an individual offender? Please explain the main differences, if any. Under Kuwaiti law, a company cannot be prosecuted in a similar way as an individual offender. A company is a deemed to be a juristic person. Juristic persons cannot be prosecuted due to the crimes committed by their representatives in the course of their employment. The basic principle of penal liability is set forth in Article 33 of the Constitution of the State of Kuwait, which provides that Penalty shall be personal Can other types of sanctions under criminal law been imposed on companies? Describe the major types of sanctions and their legal prerequisites. The Penal Code Law No.16 of 1960 ( The Penal Code ) stipulates categories of penalties, according to the nature of the offences. In addition to the original penalties, the Penal Code contains provisions regarding accessory and complementary penalties in respect of various criminal offences. A penalty is deemed as accessory if it is 1

2 determined under law as an inevitable effect of the judgment of the original penalty. A penalty is considered complementary if it is not inflicted unless pronounced by the Judge, whether obligatory or permissible to him under law. As per Article 66 of the Penal code, the following accessory and complementary penalties are determined: 1. Deprivation of the rights and privileges contained in Article 68 (i.e. deprivation of the rights to seek appointment in public jobs, membership in public councils and organizations, participation in the election of the members of the public councils and organizations). 2. Dismissal from public jobs. 3. Deprivation from practicing a profession. 4. Closing of public shops. 5. Police surveillance. 6. Confiscation. 7. Deportation of the foreigner. 8. Submission of a recognizance to keep security and to act in good conduct, attached with or without a bail. In certain circumstances the court can condemn the juristic person with one of the appertained or complementary penalties such as confiscation of the things, imposing fine, appointing receiver or even liquidation of the company in addition to the personal penalties. For instance, in respect of crimes involving trademark infringement, court can order confiscation of machines or instruments, which are used in committing the crime as per Article 93 of the Law of Commerce No. 68 of 1980 (the Commercial Code ). Please find attached relevant provisions (Articles 92, 93 and 94 of the Commercial Code) relating to the penalties in respect of trademark infringement, for your reference Are there any other kinds of sanctions in other fields of law which can be impposed on companies following the commission of an offence by its directors, managers or employees (e.g. fines, dissolution of a company, etc.)? Please describe the relevant sanctions and summarize the legal prerequisites. Please find attached relevant provisions (Articles 789 and 791 of the Law of Commerce No. 68 of 1980) relating to offences of bankruptcies, stipulating punishment for directors, managers or liquidators in respect of the various crimes committed by them. In such cases, in addition to the personal penalties, court can also penalize the company with fine and/or dissolution of the company. 2

3 2. Criminal Liability of Companies 2.1. What types of sanctions can be imposed on a company? What is the minimum/maximum punishment for each sanction? If the sanctions distinguish between certain types of offences please describe the sanctions for the most relevant offences or groups of offences What are the legal requirements for each type of sanction? 2.3. Is the prosecution of a company confined to certain types of offences or to offences committed by certain hierarchy of company staff? If yes, please explain in more detail How will acts (or omissions) of individuals (directors, managers, employees) be attributed to a company? Can acts or omissions been attributed if the individual violated only internal (but not statutory) rules or regulations? 2.5. How will mens rea of the company be established? 2.6. Is there a strict liability of a company for certain kinds of offences for which mens rea is not required? Please describe for which kind of offences mens rea is necessary and for which not Is it necessary to identify and/or convict the individual offender in order to prosecute a company? 2.8. What additional defenses (except of lack of offence) can a company raise? 3

4 2.9. Can a company avoid punishment if it is sufficiently organized, has duly instructed its directors, managers or employees and has taken reasonable care to exert control on its directors, managers or employees? What extent or organizational requirements and control are necessary to avoid conviction? Can certain kinds of sanctions been executed during the investigative phase of a criminal proceedings (e.g. preliminary seizure of bank accounts, attachment of claims)? Can both the individual offender and the company been convicted for the same offence? Can a parent/group company been prosecuted for offences being committed within a subsidiary? 3. Criminal Sanctions on a Company 3.1. What other types of sanctions but a criminal punishment can be imposed on a company? Please describe the types of sanctions and their legal requirements. As referred in Point No.1, types of sanctions that can be imposed on a company by way of a court judgment are fine or liquidation of the company Is the imposition of these sanctions confined to certain types of offences? Describe the most relevant sanctions and types of offences? Imposition of these sanctions depends on the circumstances of the case. Although there are no stipulations under law as to the specific types of offences that could result in sanctions on companies, the most common types of offences are trademark infringement and bankruptcy related offences What defenses can a company raise against these offences? A company could file a case seeking cancellation of the proceedings. 4

5 3.4. Can such sanctions been executed during the investigative phase of a criminal proceedings? No such sanctions can be executed during the investigative phase of a criminal proceeding. Sanctions can be executed only as a result of a judgment issued by a court to that effect. 4. Procedural Issues in Cases of Corporate Liability 4.1. Does the prosecution have discretion to prosecute or not a company? Which aspects will the prosecution take into account? 4.2. At what stage during an investigation/proceeding does a company have the status as a suspect or similar status? 4.3. Does a company have the rights to remain silent (nemo tenetur se ipsum accusare), to refuse production of documents, to deny access to company site without search warrant, to refuse testimony, to answer questions or to any other suspects rights? Who exerts these rights if investigations are made against the company s directors? 4.4. When will a company be informed that it is or can become prosecuted? 4.5. Can the directors, managers or employees be witness in proceedings against a company? Does this also apply if the directors, managers or employees are suspects themselves? 4.6. Will there be a joint proceeding against the company and the individual offender? 4.7. Does the proceeding against a company differ from that against an individual suspect? If yes, describe the elemental differences. 5

6 5. Procedural Issues on Other Criminal Sanctions 5.1. Does the prosecution have discretion to impose or not a sanction on a company? Which aspects will the prosecution or court take into consideration? No, the prosecution cannot impose a sanction on a company. Sanctions can be imposed only by way of a judgment issued by a court to that effect. However, depending on the circumstances of the case, for instance in a case related to bankruptcy, the prosecution is empowered to impose certain preventive measures like freezing the bank account of the company, appointing a receiver to manage the affairs of the company etc Does the company, have the status of a suspect or a similar status and at what stage in proceedings? The Company will not be treated as a suspect at any stages of the proceedings When will the company been informed that the prosecution is considering to impose sanctions or have sanctions imposed? Not applicable, as the prosecution cannot impose sanction on a company Which procedural rights does a company have when it is at risk that sanctions might be imposed? The Company is entitled to file a case seeking cancellation of the proceedings Will there be joint proceedings against the company and the individual offender? In certain cases, joint proceedings can be initiated against the company and the individual offender. For instance, the public prosecution can give instructions to the company s bank to freeze the bank account of the company or the company can be forced into receivership in order to prevent any detriment against the pending criminal action Does the proceeding against a company differ from that against an individual suspect? If yes, describe the elemental differences. Yes, a corporate entity cannot be treated as an individual suspect. Only certain preventive measures such as appointing a receiver or freezing the bank account can be taken against the company. 6

7 6. Criminal Liability of Directors or Managers 6.1. Can directors or managers be criminally held liable for offences committed by other individual directors, managers or employees? Which legal concepts apply in your jurisdiction? The directors or managers can be held liable for the offences committed by other individual directors, managers or employees, for their action or omission unless they prove that they are not in such official capacity that binds them responsible for such offences. In case of a final judgment declaring a company bankrupt, the members of its board of directors, managers or liquidators can be penalized if it is proved that they have committed certain offences after the company ceases payment of debts. Please find enclosed copies of Articles 789 and 791 of the Law of Commerce No. 68 of 1980, wherein enumerated are the specific offences What are the legal requirements for a criminal liability of directors and managers for offences committed by others? If it is proved that the manager or director is in a position to control the offenders and if no action has been taken to prevent such an offence, then a criminal liability may arise against them for the offences committed by others Does a criminal liability arise only from the fact that another director, manager or employee was not adequately selected, instructed, supervised or the company not adequately organized? Yes, if the director or manager did not take necessary action to prevent such an offence, which should have been reasonably taken care of either by instructing the concerned person, supervising or by adequately selecting the employee, then a criminal liability may arise against him What recommendations do you have to exclude or minimize criminal liability risks of directors of a company? In order to exclude or minimize the risks of criminal liability of managers or directors of a company we recommend that the managers or directors should have some background of the laws and regulations applicable to the activities of the company. Further, legal consultation is essential while making key business decisions. 7