Criminal Liability of Legal Persons in Estonia

Author:Jaan Ginter
Position:Professor of Criminology, University of Tartu

1. General remarks - 1.1. Liability only for listed crimes - 1.2. Sanctions - 1.3. Who can be held liable? - 1.4. Liability for intentional crimes and crimes of negligence - 2. Rules of imputation - 3. The ne bis in idem principle not precluding ­simultaneous liability of a natural person - 4. Is the Estonian Penal Code in accordance with EU law? - 5. Conclusions

1. General remarks

Estonia introduced criminal liability of legal persons with the adoption of the new Penal Code of 2002. 1 The Estonian courts and public prosecutors have applied the provisions extensively, but so far the topic has attracted the attention of only a few legal scholars. 2

According to § 14 of the Penal Code, "in the cases provided by law, a legal person shall be held responsible for an act which is committed by a body, a member of a body, a senior official, or a competent representative in the interest of the legal person. Prosecution of a legal person does not preclude prosecution of the natural person who committed the offence. The provisions of this act do not apply to the state, local governments, or legal persons in public law". Section 37 asserts that "legal persons with passive legal capacity are capable of guilt". Before the introduction of the new Penal Code, legal persons were liable only for administrative offences.

1.1. Liability only for listed crimes

In Estonia, legal persons can be held criminally responsible only for those acts for which there exists a special provision in the Special Part of the Penal Code laying down that they are punishable when performed by legal persons. The number of crimes for which criminal liability is imposed on legal persons has increased since 2002 and today there are 133 such crimes in the Special Part of the Penal Code. The list includes crimes - such as pollution of the environment, abuse of inside information, tax evasion, fraud, giving bribes, and trading in pirated works - that have been commonly associated with the idea of criminal liability of legal persons. However, there are a number of crimes that are quite remote from the usual activities of legal persons, such as war propaganda, the sale or purchase of children, and acts of terrorism,that also form part of the list. Everyday street crimes like assault and theft are excluded from the list, as are murder and manslaughter. It is not very clear why for certain crimes legal persons are liable and for others they are not. Nevertheless, it is practical to limit the number of crimes for which legal persons can be held liable because in Estonia, according to the legality principle, criminal proceedings are initiated whenever information exists that a crime may have been committed. In addition, criminal proceedings may be terminated only on the grounds listed in the Code of Criminal Procedure. 3 Without such limitation, there would be an inquiry in every criminal case as to whether a legal person should be held responsible for the crime.

1.2. Sanctions

There are only two sanctions in the Penal Code that can be employed to punish legal persons - pecuniary punishment 4 and compulsory dissolution of the legal person. 5 In the case of a legal person, the court may impose a pecuniary punishment of 50,000 to 250 million kroons - i.e.,a fine of about 3,000 to 16,000,000 euros - on the legal person. A pecuniary punishment may be imposed on a legal person also as a supplementary punishment in combination with compulsory dissolution. A court may impose compulsory dissolution on a legal person that has committed a criminal offence only if the commission of the criminal offence has become part of the activities of the legal person.

1.3. Who can be held liable?

In Estonia, a legal person can be held responsible only if the entity is a legal person according to § 6 of the Estonian General Part of the Civil Code Act. 6 An entity that does not act in its own name, such as a group of natural persons acting in agreement, and with no registration or capacity to have legal rights, cannot be held criminally liable. The state, local governments, and legal persons in public law cannot be held criminally responsible either. The reason for the exclusion of the state is fairly self-evident, since criminal responsibility is enforced by the same state. However, the reasons for excluding local governments and legal persons in public law are less obvious. It has been suggested that they are excluded because they act in the public interest, their functions are established by public legal acts, and it is not possible to apply compulsory dissolution to them. 7

1.4. Liability for intentional crimes and crimes of negligence

According to the Estonian Penal Code, a legal person may be responsible for both intentional and negligent acts. Although the literal text of § 14 of the Penal Code states that legal persons are liable only for acts committed in the interests of the legal person and given that it is not completely clear whether it is possible to be negligent in the interests of a legal person, the Special Part of the Estonian Penal Code explicitly specifies that legal persons are liable for several concrete crimes of negligence as well. Therefore, the text of § 14 (1) stating that a legal person is responsible only for an act that is committed "in the interest of the legal person" should be interpreted to mean that the legal person is responsible for negligent acts that have been committed while the controlling body or senior official of the legal person was acting in the interests of that legal person.

2. Rules of imputation

The text of § 14 states that only acts committed by a body, a member of a body, a senior official, or a competent representative of a legal person can be imputed to the legal person. The code is silent about which bodies' acts can be imputed. The most well-acknowledged opinion is that the acts of all the bodies listed in the statutes of the legal person, including the general meeting, the management board, the supervisory board, and the bodies that can act in the name of the legal person, can be imputed to the legal person. 8 Still there remains a question as to whether additional corporate organs such as audit committees qualify as well. 9 The wording of § 14 is somewhat strict in listing the actors whose acts can be imputed to a legal person, and the English translation of the text is even stricter. The Estonian term 'juhtivtöötaja' has been translated into English as 'senior official'. The Estonian term 'juhtivtöötaja' can be understood as referring to an employee having some administrative functions in an organisation, but the term 'senior official' refers to some higher level of administration. Estonian court practice has applied a broad interpretation of the concept of juhtivtöötaja. The Estonian Supreme Court has asserted in several cases that "as in big companies top-level executives do not handle everyday business and in concrete spheres they delegate their powers to lower-standing executives, the term 'juhtivtöötaja' includes middle-ranking executives having independent decision-making power in certain fields and therefore being able to direct the will of the legal person". 10 The Supreme Court has indicated that a legal person may be responsible even if the criminal act to be imputed to that legal person was committed not by an executive but merely by an employee of the legal person, provided that the act was ordered or at least approved by an executive official or a body. 11

Until 28 July 2008, the Estonian penal law denied the opportunity to impute actions of its contracted agents to a legal person. In this respect, the Supreme Court did not agree to broaden the definition and decided that if the criminal act - for example, presenting false information to customs authorities - was committed not by a senior official or a body of the legal person but by a contracted agent, the legal person is not liable. 12 The situation was criticised by scholars 13 and international bodies. 14 The Estonian Parliament, Riigikogu, reacted and adopted amendments to the Estonian Penal Code adding "competent representative" to the list of persons whose acts can be imputed to a legal person. The term...

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