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Deferred prosecution agreements

Published 1 septiembre 2014

The Crime and Courts Act 2013 (the "Act") introduced DPAs with effect from 24 February 2014. A DPA is an agreement between the Crown Prosecution Service or Serious Fraud Office and a company, partnership or unincorporated association that is being prosecuted for an offence. DPAs will be used in respect of specific offences which, broadly, involve fraud and economic crime (for example false accounting, forgery, tax evasion, bribery, corruption and money laundering).

A principal purpose of DPAs is to expedite a resolution in cases of corporate criminality by encouraging a culture of cooperation between the entities and the prosecutors. Pursuant to a DPA the prosecutor will suspend the active prosecution. Following expiry of the DPA, and provided there has been compliance with the conditions in the DPA, the prosecution will be discontinued without conviction.

A DPA will ordinarily include payment of a financial penalty, which will be broadly comparable to the fine that a court would impose following successful conviction for the alleged offence.

Once a DPA is agreed in principle, it must be approved by the court. The court must consider that entering into a DPA is in the interests of justice and that the terms proposed are fair, reasonable and proportionate. Whilst being negotiated, the fact a DPA is under discussion will be confidential to the parties. However, once approved by the court, the DPA will be published.


Individuals cannot enter into a DPA. The increased risk for directors and officers arises from the likelihood that, after a DPA has been entered into by the entity, individual prosecutions will follow.

The code of conduct for prosecutors anticipates that entities will be required to agree to cooperate with the prosecutor in subsequent prosecutions of individuals as a condition of the DPA. An entity may also be required to make certain admissions in respect of the charges that have been brought. These circumstances will facilitate a greater degree of likelihood that a prosecution will succeed and therefore more claims will follow.

Standard D&O wordings will respond to the defence costs and expenses related to such prosecutions.

Negotiation of a DPA is strictly confidential between the prosecutor and the entity. Therefore disclosure of the negotiation of the DPA and its exact terms may not be freely made. This may impact on cover in a number of ways.

Does the fact that a DPA is under negotiation constitute a circumstance? That will depend on the facts of the case and also the degree of likelihood of claims required by the policy before notification obligations are triggered. If a DPA becomes public in a policy period subsequent to the one in which the negotiations took place, will there be cover in the later year despite a prior circumstance or claim exclusion?

Consideration will also need to be given as to whether any admissions by the entity are to be imputed to individuals and if so whether cover is affected, assuming insurer consent was not sought or provided prior to the admission. It is unlikely consent will be sought in advance due to the confidentiality obligations imposed upon the parties negotiating a DPA.

Will an entity seek to turn amounts paid under a DPA into a civil damages claim against their directors and officers? On the back of a successful criminal prosecution, we would expect an entity that has entered into a DPA to come under significant shareholder pressure to pursue the implicated directors. Such a claim will face the familiar issues that arose in the Safeway v Twigger litigation which culminated in the Court of Appeal decision in 2010. Whether such a claim will succeed will depend on the culpability of the entity, amongst other things.

At the time of writing, no DPAs have yet been entered into in the UK, but by comparison with the experience in the US, DPAs may become a frequently used method of securing results for prosecutors currently under pressure to show they are successfully addressing financial crime. Who will be first to market with a DPA extension making clear the answers to these issues?


Graham Ludlam

Graham Ludlam

London - Walbrook

+44 (0)20 7894 6442

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