Corporate compliance is now a constant concern. There are many aspects to this compliance, including the prevention of corruption and terrorist financing, personal data protection, whistleblower protection, and trade compliance—with a particular focus on compliance with international sanctions and export controls.
Beyond legal risks, companies are increasingly aware of the financial, commercial, logistical, and reputational consequences that violations of international sanctions and export control regulations can entail. As the French draft bill transposing Directive (EU) 2024/1226 is introduced, while the focus is primarily on companies’ exposure, it remains essential not to underestimate the criminal nature of violations of international sanctions and, consequently, the potential for executives to be held personally liable. This risk is even greater given that, under French customs criminal law, mere negligence is sufficient to meet the moral element required to establish the offense.
I. The cumulative liability of natural and legal persons
Article 121-1 of the French Criminal Code provides that “no one is criminally liable except for their own acts.” Since only those who actually participated in the commission of the offense are criminally liable, natural persons are the first to face prosecution, due to their direct involvement in the prohibited export, their instructions, or even their culpable passivity when faced with unlawful operations.
It is only in addition to this liability that that of the legal entity is incurred, either on the basis of special customs criminal law or general criminal law. Indeed, the provisions are drafted in such a way as to trigger both the liability of the natural persons who commit them and the legal entities for whom they are committed. More specifically, two provisions of the French Customs Code make it easy to hold a legal entity liable: Article 392 of the French Criminal Code, which provides that “the holder of goods subject to fraud is deemed liable for the fraud. ”, as the qualification of holder may be recognized for a legal entity (Court of Cassation, Criminal Division, June 29, 2016, No. 15-82.164), and Article 399 of the French Customs Code, which establishes the offense of “interest in fraud” and penalizes persons who have participated in any way in the offenses provided for in Article 414 of the French Customs Code (exports or imports of prohibited goods), with legal entities having an interest in the fraud being presumptively interested.
General criminal law, under Article 121-2 of the French Criminal Code, allows for the liability of a legal entity to be established when an offense has been committed on its behalf by a corporate body or one of its representatives.
II. The lack of formal protection against legal prosecution of individuals
While both individuals and legal entities may be held liable, Administrative Circular CRIM-00-17/G3 of October 11, 2000, issued following the introduction of criminal liability for legal entities under Article 121-2 of the French Criminal Code, urges the prosecuting authorities to prosecute executives only in cases of intentional fraud, individualized personal involvement, or gross negligence. The guidelines regarding the allocation of prosecutions between legal entities and/or individuals were confirmed by Circular CRIM 2006 03 E8/13-02-2006 of February 13, 2006, issued by the Ministry of Justice.
While these circulars — which are largely followed by the customs administration — provide a clear and fair criterion for the autonomy of an individual’s liability, they lack legal binding force and are therefore not enforceable should an individual acting in good faith ever be prosecuted personally for a violation of international sanctions.
III. The exemption from liability through delegation of authority
While the liability of a natural person can never be excluded, such a person may nevertheless mitigate their liability by demonstrating that they delegated authority (Court of Cassation, Criminal Division, March 11, 1993, No. 91-85.896). However, this delegation is exculpatory only if it meets all five of the following cumulative conditions:
– The existence of a hierarchical relationship between the delegator and the delegatee;
– The competence of the delegatee;
– Hierarchical authority – The delegatee must have genuine decision-making autonomy;
– Provision of resources – The delegatee must have the necessary resources to carry out their duties;
– Formal requirements – The delegation must be explicit, certain, and precede to the commission of the offense.
When properly established, the delegation of authority limits the criminal liability of the executive, except in cases of direct participation in the offense or a separate personal fault.
Thus, whether rightly or wrongly, the legal framework governing criminal prosecutions for violations of international sanctions ties the fate of employees and executives to the compliance of the company for which they work. Compliance in business dealings is therefore all the more important.