Deferred Prosecution Agreements: A Powerful New Tool for UK Prosecutors?

by Dechert LLP

The Crime and Courts Bill which received Royal Assent on 25 April 2013 has introduced a new enforcement tool in the UK for fraud, bribery and money laundering offences. The Crime and Courts Act 2013 (the “Act”) which is expected to come into force in early 2014 introduces deferred prosecution agreements (“DPAs”) into UK law and aligns the UK more closely with the US.


DPAs are voluntary agreements between prosecutors and (i) companies; (ii) partnerships; or (iii) unincorporated associations under which a prosecutor will not commence criminal proceedings pending successful compliance with a range of conditions such as - amongst others - the payment of penalties,1 implementing or making changes to compliance programmes, providing training to employees, co-operating with investigations related to the alleged offences and the payment of prosecution costs.2 DPAs are not available to individuals so even if companies have entered into a DPA, their employees can still be prosecuted.

The offences for which DPAs may be entered into are broadly speaking fraud, bribery and money laundering offences. The Act applies retrospectively – DPAs will be available for conduct prior to the commencement date of the Act as long as criminal proceedings have not yet been commenced.3

After the commencement of negotiations to enter into a DPA but before the terms of the DPA are agreed, the Director of the Serious Fraud Office (the “SFO”) and the Director of Public Prosecutions (the “DPP”)4 must apply to the Crown Court.5 The Court must declare that entering into a DPA is likely to be “in the interests of justice” and the proposed terms of the DPA are “fair, reasonable and proportionate.6 The hearing for the declaration will be held in private.7 If a judge determines that a DPA is appropriate, the terms will need to be confirmed in open court8 and the judge will need to give reasons for his decision.9

A DPA must include an agreed statement of facts but an admission of guilt is not required. If the prosecutor believes that a company has failed to comply with the terms of the agreed DPA, the prosecutor must apply to the Court.10 The judge will decide whether there has been a breach and can ask the parties to remedy the breach or terminate the DPA.11

A variation of the terms of a DPA will only take effect where it is approved by the Crown Court. As above, the Court will need to issue a declaration that the variation is “in the interests of justice” and the amended terms of the DPA are “fair, reasonable and proportionate.”12 The hearing at which the variation is considered may be held in private but if the variation is approved, reasons must be given in open court.13

Comparison with the US

In the US, the prosecutors and Courts have been criticised for a lack of transparency, interpreting the law in a judicial vacuum and showing deference towards the executive. Key differences between the DPA process in the UK and the US are as follows:

  • In the US, prosecutors can enter into DPAs with individuals whereas in the UK, only companies, partnerships and unincorporated associations can enter into DPAs.
  • In the UK, the range of offences to which DPAs apply are limited to economic crimes which are essentially fraud, bribery and money laundering offences. In the US, prosecutors have used DPAs more broadly including for health and safety or environmental offences.
  • In the UK, the Government has confirmed that an accused’s right to refuse to disclose information subject to legal professional privilege will continue to apply in its current form. In the US, companies were often finding themselves waiving legal privilege to demonstrate cooperation with an investigation. In 2006, the Department of Justice (the “DOJ”) put out guidance reminding prosecutors that they should seek waivers of privilege only in rare instances and only with approval from senior officials. The DOJ strengthened this guidance in 2008 and the Securities and Exchange Commission followed suit in 2010, but companies still sometimes waive privilege in an effort to show the fullness of their cooperation.
  • Further to Lord Justice Thomas’ criticism of the plea agreement entered into with Innospec Ltd in 2010 for lack of judicial input, the Act anticipates an early and active role for the UK judiciary in the negotiation, approval and variation of DPAs. In the US, DPAs do not require judicial approval.
  • The Act promotes transparency as it requires that the terms of the DPA, the declaration of the Court and the reasons set out at the preliminary and final hearings are publicly available. In the US, the DOJ has widely been criticised for a lack of transparency.

Whilst DPAs could provide a fair and effective alternative to potentially lengthy and expensive prosecutions, a number of important issues will need to be resolved to ensure their success.

The Act is silent on how the process will be coordinated where companies and offences cross jurisdictions. Companies which are currently or could be investigated abroad should not be disadvantaged by making disclosures and admitting wrongdoing when entering into DPAs in the UK. Companies will need to be careful and ensure that all global matters are concluded when they enter into a DPA.

The Act envisages that the judiciary will have a substantial amount of power and involvement in the negotiation, approval and variation of DPAs. It is not clear how the “in the interests of justice” or “fair, reasonable and proportionate” tests will be applied. The Government has recognised that the judiciary needs guidelines on the DPA process to ensure that there is some consistency and powers granted to them are exercised proportionately. The Sentencing Council of England and Wales is due to publish some guidelines and we will report back in due course.

The Act mandates that the prosecutors should publish the DPA, the declaration of the Court and the reasons set out at the preliminary and final hearings. Whilst these provisions will result in increased transparency, a company’s share price, its brand and employees, investors and third party shareholders may adversely be affected. This may deter companies from entering into DPAs. Furthermore, the Act does not provide clarity as to the level of fines that will be available for bribery, fraud and money laundering offences nor does it afford protection where companies hand over information or documents which may then be used in proceedings against individuals associated with the company or conduct concerned.

Self-reporting should be a factor in whether a DPA is offered and there should be a greater degree of certainty that self-reporting will lead to more lenient treatment. The statement by the Director of the SFO on 27 April 2013 that it is “not a regulator” and does “not do deals14 suggests a more aggressive stance by the SFO which is consistent with earlier comments made since the Director's appointment in April 2012. These statements may have deterred some companies from self-reporting, but the introduction of DPAs may help to reinvigorate the self-reporting process.


The Act has introduced a new tool to deal with economic crimes committed by companies. However, it remains to be seen whether it will introduce the right sort of change. The joint guidance to be issued by the Director of the SFO and the DPP is likely to set out general principles as to the appropriateness of DPAs in given cases and clarify the level of information that the relevant prosecutor will provide to companies during negotiations and after a DPA has been agreed. We will report back on further developments in due course.

Regardless of how the landscape develops, companies should take steps to strengthen existing compliance programmes to ensure that they are adequate, regularly test those programmes and provide training to employees.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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