Corporate Criminal Liability: An Assessment of the Models of Fault

AuthorNeil Cavanagh
DOI10.1350/jcla.2011.75.5.729
Published date01 October 2011
Date01 October 2011
Subject MatterArticle
Corporate Criminal Liability:
An Assessment of the Models
of Fault
Neil Cavanagh*
Abstract Current theories of corporate criminal liability in the UK are
derived from the nominalist perspective. From this perspective, a com-
pany is nothing more than a collection of individuals. This article reviews
three prominent models of fault that are based upon this perspective. It
will be shown that these models have severe limitations. Primarily, these
models fail to reflect the reality of modern corporate decision-making.
This article, after briefly justifying the imposition of liability directly upon
corporations, proceeds to examine models that are based upon the notion
of organisational fault. It will be argued that the corporate culture doc-
trine, as implemented in Australia, is the most suitable model for imposing
liability upon a corporation.
Keywords Corporate liability; Criminal liability; Corporate man-
slaughter; Attribution; Corporate moral agency
A corporation has long been recognised as a legal personality that is
distinct from its shareholders.1This has created difficulties in how to
hold these artificial legal personalities criminally liable. The major ob-
stacle to holding companies liable is that the criminal law was developed
to punish individuals. The application of human-based concepts, such as
actus reus and mens rea, to corporations was always going to prove
problematic.2
Two different approaches to this problem have developed. First, there
is the nominalist perspective which views a company as nothing more
than a collection of individuals. When speaking about a company, it is
merely ‘a shorthand way of referring to the conduct and culpability of
the individual members of the collectivity’.3From this nominalist per-
spective, four models of fault have developed. These models are the
identification doctrine, the senior management test, the doctrine of
vicarious liability and the aggregation doctrine.4Under these models
liability is derivative. Liability is attributed to corporations for offences
committed by individuals.
* Durham University; e-mail: cavanaghn@hotmail.co.uk.
1Salomon v Salomon & Co. [1897] AC 22 HL. This article makes no distinction
between ‘corporations’ and ‘companies’; the two terms will be used
interchangeably.
2 J. Gobert and M. Punch, Rethinking Corporate Crime (Lexis Nexis Butterworths:
London, 2003) 394.
3 E. Colvin, ‘Corporate Personality and Criminal Liability’ (1995) 6 Criminal Law
Forum 1 at 2.
4 Due to the brevity of this article, a detailed analysis of the doctrine of vicarious
liability has been excluded.
414 The Journal of Criminal Law (2011) 75 JCL 414–440
doi:10.1350/jcla.2011.75.5.729
Secondly, there is the realist perspective. Realists aim to break the link
between corporate and individual liability.5Liability, under this per-
spective, should not be derivative. The models, based upon this theory,
have focused upon the notion of organisational fault. Under this notion,
corporations are seen as free-standing entities, culpable for their own
policies, procedures and systems. Indeed, liability may even arise when
no individual within the corporation has the requisite fault.6This article
will focus upon two realist-based models: The corporate culture doctrine
and the structural negligence doctrine.7
The objective of this article is to evaluate each of these models of
corporate fault, in order to determine the most suitable model for
imposing criminal liability upon a corporation. To reach a conclusion,
the strengths and weaknesses of each doctrine will be identied and
then assessed in light of the alternate models. The wealth of academic
opinion concerning this topic will be addressed in the analysis of each
model.
Two criteria, in particular, will be used to evaluate the suitability of
each model. First, each model will be examined to determine whether it
provides evidential certainty. For liability to be imposed, the requisite
elements of an offence need to be proved. However, it will be seen that
under some models, there are difculties in establishing the relevant
facts. Evidential uncertainty is unsatisfactory because it allows corpora-
tions to escape liability despite their blameworthiness.
Secondly, a model must reect the reality of modern corporate
decision-making. If liability is to be fairly attributed to a company, a
model must only impose liability when the company is at fault. A model,
in order to determine whether a company is truly at fault, must be
capable of processing and evaluating a companys decisions. The starting
point of this is understanding the corporate decision-making process.
Where relevant, a number of other advantages and disadvantages of a
particular model will be examined.
With regard to derivative models, a third criterion will be used to
evaluate their suitability. These models will be examined to determine
whether they are equitable. These realist-based models, in their insist-
ence upon derivative liability, outline the individuals, or group of indi-
viduals, from whom liability can be imposed. It will be shown that
certain models, in their requirement of deriving liability from particular
individuals, work inequitably between small and large corporations. A
model should be equally effective in prosecuting large and small
corporations.
It will be shown that the derivative models are wholly unsuitable for
imposing liability upon a corporation. The primary criticism of these
models is that they fail to reect the reality of modern corporate
5 C. M. V. Clarkson, Kicking Corporate Bodies and Damning their Souls (1996) 59
MLR 557 at 566.
6 G. R. Sullivan, The Attribution of Culpability to Limited Companies (1996) 55
CLJ 515 at 524.
7 Once again, due to the brevity of this article, a detailed analysis of other models
that are derived from the realist perspective has been excluded.
Corporate Criminal Liability: An Assessment of the Models of Fault
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