Deferred prosecution agreements in the UK and US  



In an era of global enforcement of economic crime, the introduction of Deferred Prosecution Agreements (DPAs) follows developments in the UK designed to tackle corporate offending. The rationale for a DPA in the UK is that corporate crime is firstly, difficult to investigate and secondly, difficult and costly to prosecute. Companies that enter into a DPA will have to fulfil certain undertakings, over a specified period of time, in exchange for an agreement not to prosecute. If, at the end of a specified period, the prosecutor is satisfied that the corporate has fulfilled its obligations, there will be no prosecution. This approach is analogous to the US.

DPAs originated in the US and are widely used as an enforcement mechanism for issues arising under the Foreign and Corrupt Practices Act (FCPA). Lanny Breuer, former head of the DOJ, stated that they have “become a mainstay of white collar criminal enforcement”. DPAs are attractive to corporates as they avoid the stigma of a prosecution, save time and can limit the negative effects of a long investigation and prosecution.

How do the US and UK models compare?

DPAs are enacted in section 45 and Schedule 17 Crime Courts Act 2013 which was given Royal Assent on 25 April 2013. The legislation will have retrospective effect, apply to wrongdoing that is alleged to have occurred before the commencement of the Act, and are likely to commence in early 2014. DPAs will only apply to offences that are specified in the Act, which include conspiracy to defraud, cheating the public revenue and statutory offences covering fraud, bribery, VAT, money laundering, theft and others. In the US, DPAs can be used for a broader type of offending but are mainly used for FCPA offences, health and safety and environmental offences.

Similar to the commencement of the Bribery Act, the legislation provides the template, but the Code itself will determine the shape DPAs will take. Guidance in the form of a Code of Public Prosecutions must be published by the DPP and the SFO, that will identify the principles that prosecutors will apply in considering whether a DPA is a suitable disposal for a case. Likewise, the Sentencing Council will publish guidelines on penalties after conviction for economic crimes covered by DPAs. It is anticipated by the government that these will offer the certainty around potential penalties which could be agreed under a DPA. The legislation promotes the twin principles of transparency and consistency – principles which are said to be lacking with a US DPA.

Unlike the US model, the UK prosecutor must secure the Crown Court’s approval, on two separate occasions, in the discussions with the prosecutor to satisfy the Court that the DPA being entered into is in the interests of justice and is fair, reasonable, and proportionate. The first hearing will be held in private, after negotiations commence but before the terms of the DPA are agreed. Interestingly the test the judge has to apply was referred to in SEC v Bank of America No9 Civ 6829 (JSR), 10 Civ 0215 (JSR).

Once the terms are agreed the prosecutor will then proceed to a final hearing during which the Court will again consider whether the terms of the DPA are in the interests of justice and are fair, reasonable, and proportionate. Only then is the DPA approved. The court may reject the DPA at either stage. Judicial involvement and sanctioning of a DPA is seen as critical in the UK system and is one of the central differences to the US procedure. The approach also reaffirms the principles of open justice and judicial oversight articulated by Thomas LJ in R v Innospec[2010] Crim. L.R. 665.

Whilst transparency in any justice system is essential, there is an element of uncertainty with the UK model which may cause difficulties as the Court may reject the DPA either at the early stage or at the conclusion of the discussions with the prosecutor. If it is the latter, it could leave a company in a difficult and potentially unfair position. The US system, by contrast, simply requires that criminal information is filed in Court, making the criminal charges public knowledge.

There is no doubt that the UK is making efforts to tackle corporate offending in a fair and transparent manner. At first glance, DPAs appear to be a sensible way forward because, if they are used successfully, they will save time, allow victims to be compensated quickly, save costs incurred in lengthy investigations and prosecutorial processes and allow a corporate to take remedial action which will reduce reputational damage. However, it is likely that DPAs, like Civil Recovery or The Attorney’s Guidance on Plea Discussions in Cases of Serious and Complex Fraud, may not be the automatic green light to alternative tools to be used by enforcement agencies in the UK. It will be interesting to see if the UK authorities place similar emphasis as their US counterparts do, on cooperation, internal investigations conducted by outside counsel, remedial action and the impact of a prosecution on innocent third parties (the US tendency to focus on these factors was identified by US Government Accountability Office in its testimony to the Subcommittee on Commercial and Administrative Law, Committee on the Judiciary, House of Representatives in June 2009).

How the political thinking will impact on the agreement to enter into a DPA remains to be seen, especially as the SFO appears to be taking a strong ‘no deals approach’ to its functions. Therefore, the only certainty at present is that a DPA, in principle, undoubtedly signals a radical change in the way corporate offending is treated in this jurisdiction, for corporates, prosecutors and the judiciary alike.


Kathleen Harris is a partner at Arnold & Porter LLP. She can be contacted on +44 (0)20 7786 6100 or by email:

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Kathleen Harris

Arnold & Porter LLP

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