Under Article 11 of the Portuguese Penal Code, in principle,
only individuals may be held liable for criminal offences. As a
general rule, corporate entities are not considered to be
defendants for purposes of criminal liability.
This principle is in harmony with the traditional grounds of
the Portuguese Criminal Law, which provides that conviction on
a criminal penalty is dependent on the criminal intent
of the defendant.
However, this rule has always raised two main
difficulties.
On one hand, with certain types of crimes, such as crimes
against financial interests, public health or the environment,
failure to hold corporate entities criminally liable could lead
to their impunity under the law. In some circumstances, it is
not possible to identify, within the organization of the
company, which particular worker, director or organ committed
the unlawful activity. The existence of several spheres of
administration and the division of tasks, especially when large
companies are involved, frequently make it difficult to
establish causality between the action of an individual and the
violation of the law.
On the other hand, corporate entities have become the usual
and standard vehicle to perform financial, industrial
and trading activities. As a result, the failure to provide for
corporate entities' criminal liability when (unlawfully)
developing or commissioning such activities would constitute an
unjustified and unfair privilege for corporate entities.
Taking this into consideration, current Portuguese law
provides, in some restricted cases and due to the special
characteristics of the relevant crimes, criminal liability for
corporate entities. Those crimes include the following:
- crimes against the economy, such as fraud in the
attribution of subsidy, fraud in the attribution of bank
credit to a company, forestalling the market, and unlawful
manipulation of the quality and composition of
foodstuff;
- crimes against public health, such as illegal slaughter
of animals for public consumption;
- crimes against the security of computer data, systems or
communication networks;
- tax crimes, such as smuggling, tax fraud, tax
embezzlement and crimes against social security;
- labour crimes, such as illegal employment of minors and
contempt of an order of the General-Labour Inspection.
Only individuals may be sentenced to imprisonment.
Therefore, Portuguese criminal law establishes alternative
penalties to punish legal persons in case of conviction for one
of the above-mentioned crimes. The main penalties established
under Portuguese law to punish legal persons are admonition, a
fine, or a judicial winding-up order.
The fine is set taking into consideration the legal person's
financial capacity. Failure to pay the fine within the time
limit established by the court could result in the assets of
the legal person being sold off to pay the fine. In the case of
implied partnership (for example, a company that is not legally
incorporated), if the fine is not paid within the time limit
set by the court, the personal assets of the partners may also
be sold.
Winding up will only be ordered if the corporate entity was
incorporated with the exclusive or predominant intention to
commit the above-mentioned crimes, or if it is being used
repeatedly to commit those crimes.
Furthermore, Portuguese law also establishes several
ancillary penalties to punish corporate entities, such as
exclusion from entitlement to public benefits or aid, temporary
or permanent disqualification from the practice of commercial
activities, loss of equipment or goods, revocation of licences,
and publication of the decision convicting the corporate
entity, among others.
However, the ancillary penalties may not be ordered
immediately as a direct consequence of the conviction. On the
contrary, punishing the corporate entity with an ancillary
penalty always depends on the assessment of special requisites
and conditions (that furthered the commitment of the crime).
For example, in principle, the exclusion from entitlement to
public benefits may only be ordered if there is a direct link
between committing the crime and the relevant benefit.
According to Portuguese law, corporate entities may only be
held liable for the crimes mentioned above if those same crimes
have been committed:
- for the benefit of the corporate entity;
- by a person, acting either individually or as part of an
organ of the corporate entity, who has the authority to take
decisions on behalf of the corporate entity or has the
authority to exercise control within the corporate
entity.
However, the corporate entity will not be held liable for
the relevant crime if the individual that acted unlawfully
violated an order or instruction given by a competent director
of the corporate entity.
Considering that Portuguese law provides (exceptionally) for
the criminal liability of corporate entities, it is necessary
to reconcile it with the traditional grounds upon which
Portuguese criminal law is founded – that a conviction
on a criminal charge requires the criminal intent of
the defendant.
Portuguese legal authors argue that it is necessary to
analyse the criminal intent in a different perspective
when corporate entities are involved.
Only individuals have the ethical structure and the domain
to exercise the free will that allows for the judgement of
criminal intent. However, as a human and social
organization, corporate entities are also the result of free
will.
Therefore, in some specific and restricted circumstances,
when the characteristics of the relevant crime allow it, the
unlawful free will of the corporate entity could be considered
equivalent to the criminal intent of an
individual.
On the other hand, it is necessary to clarify the connection
between the criminal liability of the corporate entity and the
criminal liability of the individual that has committed the
crime. Portuguese law establishes that the criminal liability
of a corporate entity does not exclude the criminal liability
of the individuals who are the perpetrators, instigators or
accessories of the relevant crime. Therefore, cumulative
liability is admissible.
Stemming from the traditional grounds upon which Portuguese
criminal law is based, to punish two persons for the same crime
it is necessary to establish some kind of connection between
them. It could be a connection of conspiracy, instigation,
complicity or compelling another to commit a crime.
However, the cumulative punishment of the corporate entity
and the individual that has committed the relevant crime does
not seem to correspond to any of those categories. On the
contrary, it might seem that the law is punishing the same
behaviour twice. Thus, this cumulative liability raises
questions regarding the possible violation of the non bis
in idem or double jeopardy principle (prohibition of
double punishment of the same fact).
In recent years, the EU Council has approved several
framework decisions regarding judicial cooperation in criminal
matters.
As an example, it is possible to state Council framework
Decision 2000/383/JHA of May 29 2000 on increasing the public
safety through criminal penalties and other sanctions against
counterfeiting in connection with the introduction of the euro;
Council framework Decision 2001/413/JHA of May 28 2001
combating fraud and counterfeiting of non-cash means of
payment; Council framework Decision 2002/629/JHA of July 19
2002 on combating trafficking of human beings; Council
framework Decision 2003/80/JHA of January 27 2003 on the
protection of the environment through criminal law; and Council
framework Decision 2004/68/JAI of December 22 2003 on combating
the sexual exploitation of children and child pornography.
These frameworks establish that each member state must take
the necessary measures to ensure that corporate entities can be
held liable, whenever a relevant crime is committed to its
benefit, by a person that has the power of representation of
the corporate entity, an authority to take decisions on behalf
of the corporate entity or an authority to exercise control
within the corporate entity.
Furthermore, the frameworks establish that each member state
must take the necessary measures to ensure that a corporate
entity held liable for a relevant crime is punishable by
effective, proportionate and dissuasive sanctions, including
criminal or non-criminal fines.
The EU framework decisions do not oblige member states to
provide for criminal penalties to punish corporate entities for
unlawful conduct. Instead, each member state has the power to
decide, according to a judgment of proportionality and
effectiveness, if corporate entities will be punished with
criminal penalties or with non-criminal penalties, such as
administrative fines.
Pursuant to the EU framework decisions, and according to the
available information, the Portuguese state has recently
proposed extending the list of criminal offences that can
result in criminal liability for corporate entities.
The former Portuguese Counsel of Ministers approved a bill,
not yet passed by the parliament, that established criminal
liability for corporate entities for the following
offences:
- non-natural and non-authorized conception and
reproduction;
- trafficking in human beings for the purposes of labour
exploitation;
- trading in human beings;
- crimes against sexual self-determination;
- child pornography;
- counterfeiting of money and securities;
- counterfeiting of weights and seals;
- crimes against the environment;
- criminal conspiracy;
- trafficking of influences (illegal lobbying);
- active corruption;
- contempt of an order from an authority;
- money laundering; and
- violation of an in camera proceeding.
(Since this bill was introduced, the Portuguese government
has been dismissed, making this bill forfeit.)
According to the bill, if a corporate entity was held liable
for any of those offences, it should be punished with a
criminal penalty, such as a criminal fine or a winding-up
order.
Previously in Portugal, in cases of unlawful conduct,
corporate entities were ordered to pay an administrative
penalty (non-criminal fine). As a general rule, those fines
have a maximum value of €44,891.81 and may be determined
by a non-judicial authority.
Administrative penalties, that is, non-criminal fines, will
continue to be the standard and most frequent punishment
suffered by a transgressor corporate entity. However,
considering that the list of criminal offences that can result
in criminal liability for corporate entities could be extended
in the future, some of the most serious unlawful acts committed
by corporate entities will be punishable under criminal
law.
Regarding the categories of crimes for which companies could
be liable, the position of the individual responsible for the
actions is relevant, as, in principle, only actions committed
by a representative of the company (more often than not a
director) in the name and interest of the company are relevant
for criminal purposes. Cumulative liability against both the
company and the individual could result.
In any case, for the analysis of criminal liability, it is
generally necessary to identify the individual that committed
the unlawful action. This means that, when a certain crime is
committed within the context of the functioning of the company,
it is necessary to identify the particular worker, director or
individual that has committed the unlawful activity.
The position of the individual in the company structure is
relevant.
On one hand, the Portuguese Penal Code establishes the
criminal liability of individuals that commit unlawful actions
in their capacity as members of a corporate body or as
representatives of the company, on behalf of that company.
On the other hand, several spheres of administration and the
division of tasks, especially when large companies are
involved, frequently impede the establishment of causality
between the action of an individual and the violation of the
law. Situations occur in which, as a result of this difficulty,
the public prosecutor holds the members of the board
responsible for the alleged criminal actions, identifying them
as the company's decision makers and therefore responsible for
the actions on behalf of the company.
An analysis of the company's internal organization is
necessary to assess the risk of this situation occurring, and
to identify the possible measures to reduce the risk of
criminal accusation of a director, in situations in which that
director is totally unaware of the criminal actions that have
allegedly taken place, or of which the director stands accused.
In certain situations, formal mechanisms of internal
distribution of responsibilities can help to identify more
clearly the individuals responsible for several areas of
business and, consequently, responsibility for actions
considered to be criminal offences.
| Author biography |
Rui Patrício
Morais Leitão, Galvão Teles, Soares
da Silva & Associados
Having joined MLGTS in 1994 as a trainee lawyer, Rui
Patrício has since then developed a successful
career as a litigation lawyer. He is now one of the
firm's most experienced lawyers in litigation, and has
recently developed the firm's criminal and misdemeanour
litigation practice. His practice also focuses on the
area of civil litigation, namely cases of civil
liability, and in cases regarding agency and
distribution agreements, leasing, factoring and
franchising.
The development of the criminal and misdemeanours
practice has been accompanied by an academic and
lecturing career. Since 1994 he has taught at the
University of Lisbon Law School (in the area of civil
and criminal law), where he completed his degree in law
in 1994 and his masters in criminal law in 1999.
To round out an already distinguished professional
career Rui Patrício is also the author and
co-author of several criminal law books and articles in
his areas of specialty, in law magazines and other
legal publications. He has participated in seminars and
conferences and has lectured in post-graduate courses,
predominantly on criminal and misdemeanour legal
themes.
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