Deferred Prosecution Agreements (“DPAs”), an established part of the legal landscape in the US, have today, 24 February 2014, become available to prosecutors in the UK, thanks to Schedule 17 of the Crime and Courts Act 2013.

As we reported previously, DPAs allow commercial organisations (not individuals) to settle allegations of criminal economic activity (for example bribery or money laundering) without being prosecuted and without any formal admission of guilt.

An agreement is struck between the prosecutor and the corporate, under which the prosecutor will bring criminal charges but then immediately suspend the process, on the proviso that the alleged offender has agreed to, and complied with, a number of terms and conditions that the prosecutor deems appropriate, such as paying a financial penalty, paying compensation and co-operating with future prosecutions of individuals. If the company does not honour the conditions, the prosecution may resume.

DPAs are a “discretionary tool” at the disposal of prosecutors that will only be available after a formal invitation to enter into negotiations has been extended to a corporate. A DPA could be appropriate where the public interest is not best served by mounting a prosecution, for example where there is a lack of history of similar conduct, the offending represented the actions of a rouge employee or agent, the offending is not recent in nature and the organisation in its current form is effectively a different body to that which committed the offence, the corporate has a “genuinely proactive and effective” corporate compliance programme in place; and a generally proactive approach has been adopted by the corporate’s management team when the misdeeds werebrought to their attention, including self-reporting and remedial actions (such as the compensation of victims).

Entering into a DPA will be a transparent public event and the process will be supervised by a Crown Court judge who must rubber stamp the resolution of the case by way of a DPA, after considering the proposed terms at both a preliminary, and then a final, Court hearing. This is a key difference in how DPAs will function in England and Wales in comparison with the US. This of course means that even if a corporate has reached an agreement with the prosecutor, the DPA could still fail and the corporate may therefore find itself facing a criminal prosecution in any event.

It will be interesting to see how and when DPAs are used in the UK and what impact the judicial oversight plays in their success.