First judgment of the Supreme Court on companies for their criminal liability.

By Xavier de Bernat

New energy audit obligation for large companies.

By Martín Hernández

First judgment of the Supreme Court on companies for their criminal liability.

Xavier de BernatThe Criminal Code reform under Organic Law 5/2010, of 22 June, modifying Organic Law 10/1995, of 23 November (subsequently modified by Organic Law 1/2015, of 30 March) implied a new milestone in the Spanish legal system when it introduced the legal persons’ criminal liability, a situation that broke with the old Roman aphorism societas delinquere non potest, whereby companies could not get involved in crimes.

This reform generated and generates a barrage of questions by our entrepreneurs on how to protect them before the origin of any possible criminal liability of their companies, which has led to the need of incorporating and implementing a criminal compliance program in each company to avoid the liability set out in article 31.bis of the Criminal Code.

…the Plenary of the Criminal Courtroom broadly analyses the criminal liability of three companies sentenced for their involvement as legal instruments in the commission of crimes…

However, not until 29 February 2016, the Supreme Court, in its Judgment nº 154/2016, analyses for the first time at length the criminal liability of legal persons.

In this occasion, the Plenary of the Criminal Courtroom broadly analyses the criminal liability of three companies sentenced for their involvement as legal instruments in the commission of crimes against the public health.

Specifically, such companies were part of a criminal scheme for the entry of drugs in Spain coming from Venezuela, and which were used for the import and expert in Spain of machines hiding narcotic substances that were after detected.

In its first analysis on this issue, the Supreme Court makes it clear the intentions and the bases of the criminal reform on the liability of legal persons, particularly:

1. The prior verification of the commission of the crime by the legal person member of the organization as the initial premise of the aforementioned liability.

2. The requirement to establish and correctly apply effective control measures to prevent and avoid the commission of criminal acts by the members of the organization.

This implies that the liability of the legal person requires analyzing if the crime committed within the organization has been possible or facilitated by a total absence of surveillance and control (criminal compliance) of its executives and subordinates.

Consequently, pursuant to article 31.bis of the Criminal Code, the requirements that shall concur for the existence of criminal liability of legal persons are the following:

a) Firstly, the commission of a criminal act must be certified by an individual belonging to the company (in this case analyzed, the factual or legal directors of the companies sentenced have been also sentenced for offences committed against public health).

Accordingly, it is fundamental that the individual confirms the commission of the criminal act, since otherwise the fact of declaring the criminal liability of a company without having certified its authorship would lead us to a criminal system of objective liability that has no place in our system.

b) Secondly, the legal person must have breached its obligation to establish surveillance and control measures to avoid the commission of crimes within its organization.

…the liability of the legal person requires analyzing if the crime committed within the organization has been possible or facilitated by a total absence of surveillance and control (criminal compliance) of its executives and subordinates.

Pursuant to the Court, determination of the actions of the legal person, which is relevant for the purposes of asserting its criminal liability (…) must be established from the analysis on whether the offence committed by the individual within the legal person has been possible or facilitated by the absence of a culture of respect to the Law as a source of inspiration in the actions of the organizational and independent structure of each of the individuals members of the organization, which should be expressed in some way of surveillance and control of its executives and hierarchic subordinates’ behaviour to avoid the commission thereby of the crimes in Book II of the Criminal Code.

Furthermore, and despite such circumstance does not affect this case, the Supreme Court takes this opportunity to warn on future situations of possible conflict of procedural interests between the individuals accused of any crime and the legal persons they may represent, thus effectively violating the right of defence of any company.

For this reason, the Supreme Court requests the judges and courts to avoid generating this kind of risks in order to protect the right of defence of legal persons, even suggesting our legislator to remedy this situation on a regulatory basis.

Additionally, the Judgment makes a clear difference between effectively trading companies that may be criminally liable and those merely front or shell companies, with no purpose and exclusively created to commit criminal acts.

To this last type of shell companies, the Court consents to impose, together with the relevant economic fine, its winding-up with the definitive loss of legal standing and capacity to perform any business activity.

Notwithstanding the foregoing, this Judgment is controversial, since although all Judges sign the ruling, it includes 7 dissenting votes for the following reasons:

a) Violation of the contradiction principle. Pursuant to the signatories, the Judgment decides on, as stated in Legal Ground 8, issues that have not been discussed in the proceedings.

For this reason, the signatories consider that the lack of contradiction in the processing and the absence of unanimity in the response, infuse the Judgment a temporary nature which shall be qualified according to the cases that may arise in the future.

b) Absence of a culture of control as an element of the type of criminal office. Although it is recognized that criminal liability of legal persons arises in the absence of any prevention and control measures of its internal operation, this does not mean that its absence may be qualified as the typification core, as considered by this Judgment.

c) Exemption of criminal liability and its evidence. In this case, the problem arises with respect to the evidence rules generally applied to estimate any releasing circumstance. Particularly, the signatories understand that the legal person must be the one to allege the exemption and based on that alleged and submitted thereby, the necessary evidence shall be examined to verify the actual concurrence of release.

…this Judgment gives the impression of a totum revolutum that does not guarantee, for the time being, our entrepreneurs’ peace of mind.

d) Inconsistency of the decision. As stated, the Judgment establishes the absence of a culture of respect by the sentenced companies as the typification core, which must be proven in each case by the accusing parties. However, the signatories consider that if we analyze the facts, we cannot deduce if it is proven whether the sentence companies lacked a culture of respect to the law or not, thus the Judgment lacking any base on the proven facts.

In short, the Supreme Court, with a well-meaning attitude, has tried to analyze a very new and complex issue such as criminal liability of legal persons, but falls into the error of trying to solve at the same time all problems that this issue may cause.

Consequently, this Judgment gives the impression of a totum revolutum that does not guarantee, for the time being, our entrepreneurs’ peace of mind.

New energy audit obligation for large companies.

Martín HernándezRoyal Decree 56/2016, of 12 February, transposing Directive 2012/27/EU of the European Parliament and the Council, of 25 October 2012, on energy efficiency, as regards energy audits, accreditation of service suppliers and energy auditors, and the promotion of efficiency in the supply of energy, was published on 13 February, whose purpose is to improve the energy efficiency of companies, promote the energy savings and reduce the greenhouse gas emissions. All such purposes are aimed at achieving a 20% increase on energy efficiency for the year 2020.

Among the principal measures of this regulation, the obligation to carry out energy audits is worth mentioning. This aspect may help companies to know their real situation as regards use of energy when comparing the results among them. However, such audits shall be only mandatory for companies considered as large companies, i.e., companies fulfilling any of the following requirements:

• Those employing over 250 workers.

• Those with a turnover exceeding 50 million Euros and a general balance sheet exceeding 43 million Euros.

The same shall apply for such groups of companies fulfilling the previous requirements.

Among the principal measures of this regulation, the obligation to carry out energy audits is worth mentioning.

Regarding the scope, it is remarkable that the mandatory nature of the audit is established considering the size of the company, rather than the total consumption of energy. For this reason, there may be PYMES that even consuming a lot of energy, may be excluded from the obligation to audit, which may be contradictory with respect to the purpose aimed by the Directive.

The audit shall have a validity of 4 years and shall cover at least 85% of the total consumption of final energy of the installations located in the national territory, including those that the company may have leased. We must take into account that companies considered as large companies during two consecutive year shall submit such audit by 14 November of this financial year, unless they have already carried out an audit in the previous four-year term.

For justifying fulfilment of the audit, the companies may alternatively choose between the following options:

• To apply an energy or environmental management system certified by an independent body.

• To carry out the audit pursuant to the following guidelines:

• They shall be based on updated operating data, measured and verifiable, of energy consumption and, in the case of electricity, load profiles.

• They shall consist of an exhaustive examination of the energy consumption profile.

• They shall be founded, whenever possible, on profitability criteria in the analysis of the life cycle cost, rather than mere periods of amortization.

• They shall be proportional and sufficiently representative to show a true image of the global energy performance.

The information resulting from such audits shall be updated in the Administrative Registry of Energy Audits. The competent body of the autonomous community or the cities of Ceuta and Melilla on energy efficiency shall implement an inspection system related to the performance of independent energy audits, for which purpose it shall carry out as many inspections as it may consider necessary to ensure fulfilment of such obligation, as well as to guarantee and verify its quality.

We will focus below on the energy auditor, stating the requirements for exercising their professional activity, which require fulfilment of one the following conditions:

• To have an official university degree or other qualifications, degrees or university masters on basic knowledge of energy, installations of buildings, industrial processes, energy accounting, measurement equipments and energy savings data-taking and techniques, o

We must note that the audit of a company may be carried out by qualified experts belonging to such company...

• To have theoretical or practical knowledge on energy audits, either for having any qualification of professional training whose scope may include energy audits or for having recognized professional competence on energy audits. In such cases, a theoretical and practical course on specific knowledge of energy audit shall be passed.

We must note that the audit of a company may be carried out by qualified experts belonging to such company, provided that (i) they have no direct relation with the activities audited and (ii) they belong to an internal control department of the company.
Finally, we must remark the penalties and infringement regulations. In this section, Royal Decree refers to Act 18/2014, of 15 October on urgent measures for growth, competitiveness and efficiency, which regulates penalties from 300 to 1,000 Euros (minor infringements), from 1,001 to 10,000 Euros (serious infringements) and from 10,001 to 60,000 Euros (very serious infringements).

Regarding the requirements and the necessary documentation to exercise the professional activity of energy service supplier, they are as follows:

• Documentation identifying the supplier (legal persons shall include in the corporate purpose the provision of energy services or energy efficiency improvement).

• To accredit the appropriate technical qualification.

• To have the appropriate technical means.

• To be registered with the corresponding Social Security or professional system and be up to date therewith.

• To have contracted a third party liability insurance or other guarantee covering the risks that may arise from their actions, for a minimum amount of 150,000 Euros.

Legal or natural persons wishing to establish themselves as energy service suppliers shall file, before starting the activity, an statement of compliance qualifying for performing the activity in the national territory for an indefinite term as of the filing thereof. Any modifications in relation to the details declared, as well as cessation of activity shall be communicated within one month.

The information contained in the statement of compliance submitted shall be included in the List of Energy Service Suppliers. Non-filing of the statement of compliance, any counterfeiting or omission of essential data or statements that may be included in the statement of compliance, shall entitle the competent body on energy to decide on the impossibility to continue performing the activity as energy service suppliers.