Britain's new anti-corruption law, the UK Bribery Act 2010, came
into force on 1 July 2011 after a legislative process that was
long, complex, and controversial, mainly because of the
implementing conditions. Companies in the energy sector, most of
which have transnational business activities, are clearly covered
under the law. This column will therefore briefly analyse the new
set of rules and the scope of the law.
The origins of the UK government's adoption of the UK Bribery
Act 2010 lie with the famous corruption case involving Saudi Arabia
and the English defence company BAE Systems. The Serious Fraud
Office (SFO) had decided to discontinue its investigation of the
case for diplomatic reasons, setting off an outcry in British
public opinion. It became necessary to reform UK anti-corruption
laws, and a new paradigm was instituted through the Bribery
However, once drafted, the new law was also controversial
because of its potential to compromise the competitive status of
the English market due to its stringent provisions. First, the
official prohibition on all facilitation payments (i.e. modest
payments customary in certain countries to expedite the performance
of routine actions which the proposed recipient has a clear and
non-discretionary obligation to perform) could be an obstacle to
the satisfactory course of commercial transactions for English
companies; as gifts and hospitality were strongly discouraged in
light of the strict provision of the Bribery Act, companies that
were not subject to the law could reap considerable advantages from
The Bribery Act 2010 includes several crossheadings. The first,
"General Bribery Offences", covers Sections 1 to 5 of the law and
involves conduct that matches the definition of bribery and
therefore constitutes an offence.
Section 1 of the law defines bribery as offers, promises, or
financial or any other advantage to induce a person to improperly
perform a relevant function or to reward a person for the improper
performance of such function or activity. Bribery also involves
offering, promising, or granting financial compensation or any
other advantage if the person who engages in the conduct knows or
believes that the acceptance of the financial compensation or
advantage would itself constitute an improper use of another's
function or activity.
Section 2 defines the offence committed by a person who accepts
a bribe. This offence takes various forms; it is committed where a
person requests, accepts, or actually receives financial or other
advantages, and where such request, agreement, or acceptance itself
constitutes improper performance of a relevant function or
Section 3 defines the functions and activities considered as
being susceptible of bribery, to wit: any function of a public
nature, any activity connected with a business and any activity
performed on behalf of a company or other body of persons. The
activities in question may therefore be either public or
The fourth section pertains to the concept of improper
performance. Performance is improper where a function is performed
for purposes that are counter to the principles of good faith or
are in breach of what would normally be expected of the person
performing the function or activity.
Section 5 pertains specifically to what would normally be
expected of a person performing a function. The standard it sets
out is what any reasonable person would expect of another who is
performing a relevant function or activity. If the person
performing the relevant function is not a citizen of the United
Kingdom, only a written law applicable to the country where such
person is a citizen may be cited in his or her defence. The section
then clarifies what is meant by the concept of written law, i.e.
any constitution or legislative provision applicable to the country
concerned, or any published judicial decision.
The second crossheading deals specifically with the bribery of
foreign public officials and contains Section six. The section
provides that an offence has been committed wherever a person
intends to influence another in the latter's capacity as a foreign
public official. The offender must also intend to obtain advantages
for his or her business by offering, promising, or giving financial
advantages or gifts either directly or through a third party.
Section 6(5) defines the concept of a foreign public official. A
public official is someone who holds a legislative, administrative
or judicial position in a country or territory outside the United
Kingdom, or who works for a public agency or public enterprise of
such country or territory, or who holds an official function within
a public international organisation.
The third crossheading contains provisions on the failure of
commercial organisations to prevent bribery, and covers Sections 7
to 9 of the Bribery Act. This is a new offence which occurs
whenever an act of bribery is committed by a person associated with
a company - for example, an employee, agent, or even a third party
as provided in Section 8. Section 7(2) specifies that it is a
defence if the company concerned can demonstrate that it had
implemented adequate procedures for preventing an associated person
from engaging in bribery.
Crossheading four, covering Sections 10 and 11, is on
prosecution and penalties for the offences discussed above. Section
10 requires the consent of the appropriate prosecutor for any
prosecution, depending on the offence, and sets out an exhaustive
list of such prosecutors. Section 11 lists the penalties applicable
to individuals or companies having engaged in bribery. Prison
sentences may be for up to 10 years, and there is no upper limit on
the fines that may be charged to companies.
Crossheading five, "Other Provisions on Offences", includes
Sections 12 to 15 of the law. Section 12 stipulates that for an
offence to come within the scope of the law, it must have been
committed on the territory of the United Kingdom, or, if committed
outside the UK, the offender must have a close connection with the
United Kingdom. Specifically, the law applies if the offence was
committed by a British citizen, a person usually resident in the
United Kingdom, a company with its registered office in the United
Kingdom or a Scottish partnership. As explained in Section 13, the
accused party may mount a defence by demonstrating that the conduct
was necessary for the proper exercise of an intelligence service or
the armed forces. Section 14, on the other hand, states that senior
officers of a company that has engaged in bribery will also be
prosecuted for the offence.
The sixth and last heading of the Bribery Act is for
supplementary and final provisions. Section 16 simply provides that
the law will also apply to any individuals in public service in the
UK, while Section 17 repeals other legislative provisions
pertaining to bribery.
On 30 March 2011, the UK government published guidance for
certain concepts used in the Bribery Act 2010.
The first significant notion is that of "adequate procedures",
in other words all measures that companies conducting business in
the United Kingdom must establish in order to comply with the law.
Companies that fail to implement such procedures incur criminal
liability and risk unlimited fines in the event a person associated
with the company engages in a proven instance of bribery.The
Bribery Act therefore instituted a new offence: the failure by a
legal entity to prevent bribery.
The guidance document indicates that procedures are adequate
where they are:
proportionate to the company's business and risks;
from regular, documented risk assessments;
with verifications of and due diligence on associated persons;
subject of internal and external communication;
monitored and periodically revised;
supported by top level management, which should explicitly prohibit
all forms of bribery.
Guidance is also provided on what "gifts and hospitality" means.
Such expenses incurred as part of a business relationship are
allowed if the gifts and hospitality in question are reasonable and
proportionate, intended to cement the relationship or present
products and services.
As for an "associated person", the concept should be understood
broadly. However a company may not necessarily be liable under
criminal law if the "associated person" is a shareholder or an
The "conduct of business in the UK" is another notion clarified
in the guidance document, with details that are important for a
better understanding of the extraterritorial scope of the Bribery
Act. For example, the mere fact that a company lists securities or
has a subsidiary in the UK does not suffice to show that the
company "conducts business" on UK territory.
In addition, it must be remembered that this guidance offered by
the UK government has no legal status. The true scope of the
Bribery Act 2010 will only be genuinely established through the
interpretations of UK courts and prosecutors. It is entirely
possible that the courts and prosecutors will construe the law more
narrowly than the guidance document does, especially in terms of
its extraterritorial scope.
The exact scope of the law is unclear, especially for energy
sector companies which, due to their multiple offshore activities,
are not always in a position to know whether they are subject to
this law whose implementing terms diverge depending on the type of
For example, if a French company has a branch in the United
Kingdom, it is considered as conducting business on British soil.
The Bribery Act therefore applies directly to the company, and to
all business that the company carries out worldwide. A
qualification about the scope may be appropriate here, as it is
likely that the SFO will automatically focus on evidence it is able
to gather on UK territory. Even though the new UK anti-bribery
policy is to prosecute offences committed abroad, the
jurisdictional issues that could arise in practice cannot be
ignored; prosecution will mostly likely be mainly tied to UK
territory, despite the universal scope of the law.
Next, if the company involved is French and has a subsidiary in
the United Kingdom, the implementation of the law will depend on
how much control the company exerts over that subsidiary. If the
French company controls the subsidiary, it will be deemed to
conduct business on UK soil.
However if the French company is merely listed on the stock
exchange, this does not demonstrate that it conducts any business
in the UK.
Last, if a French company canvasses for business or makes
deliveries to the United Kingdom, it is unclear whether it would
fall within the scope of the law. It is nevertheless possible to
imagine the English courts interpreting the law in favour of a
defendant, and deciding not to apply the provisions in such
situations. For now, we can only wait for case law on the issue to
As UK companies are automatically subject to the new law, those
with subsidiaries abroad will have to abide by the new "adequate
procedures"; UK parent companies wishing to open subsidiaries
abroad will have to adapt their anti-bribery programme so that it
extends to their entire group, regardless of the country where
subsidiaries are located.
In the end, the UK Bribery Act is controversial above all
because it created a new offence for a failure to prevent.
Companies now have a duty to prevent bribery by implementing
"adequate procedures". Whereas previously, companies accused of
corruption could develop various strategies to defend themselves,
now there is only one defensive manoeuvre they can use, details for
which are in the guidance provided by the UK government.
The new law therefore establishes severe penalties, yet at the
same time it is progressive in that it does not rely on punishment
alone. English lawmakers clearly wished to encourage prevention and
proportional measures to effectively prevent bribery, especially in
terms of what demands can be made on companies given their
Yet the Bribery Act is open to criticism because it lacks
clarity. It is true that the guidance document contains many
clarifications, but these do not have the force of law. They are
therefore not binding on courts and prosecutors, which have broad
discretion to interpret the provisions. This situation is one of
considerable legal uncertainty for companies. Companies cannot know
with any certainty whether the law applies to them, nor exactly
what measures they should establish to protect themselves if they
are indeed subject to the law's provisions.
Companies operating in the energy sector, in a business that is
diversified and international by definition, therefore do not know
for certain at this point whether their procedures will be
considered "adequate" by English courts and prosecutors in the
event of proceedings for a bribery offence.