A corporation has a legal personality in itself and can accordingly sue and be sued, hold property and transact. However, a corporation exists as an artificial form, created and managed by human beings. It is, hence, not easy to imagine that a corporation can commit a crime. Our common sense and philosophical individualism that underlies the criminal law system have prohibited the introduction of a corporate criminal responsibility for a long time. However, as the number of corporations and accordingly damage and injury corporations caused to property and person have dramatically increased over the last century, the public perception of corporations has moved toward recognizing corporations as a legal entity that can be held criminally liable on the basis of its own fault. The old rule that corporations cannot be held criminally responsible (societas delinquere non potest) is gradually abandoned. Since the 1990s, some countries like UK, Australia have enacted legislations which make a corporation criminally liable on the ground of management failure or corporate culture.
In the UK, two theoretical instruments, vicarious liability and identification principle, have been developed for attributing to a corporation the acts and states of mind of individuals it employs. According to the vicarious liability standard, a corporation is vicarious liable for an offence of its servants or agents. The logic of the vicarious liability of a corporation is very simple: a corporation, being merely a person in law only, and not a real one, can act only through its agents or employees, so it may be held criminally responsible for the offences of its agents or employees. The notion that a corporation could be directly liable for committing a criminal offence was developed in the mid-19th century. This new form of liability, known as the alter ego theory or identification principle, was based on the idea that the company itself can be identified with its senior officers, because, as the house of lords said in Tesco Supermarkets Ltd v. Nattrass, “normally the board of directors, the managing director and perhaps other superior officers of a company are an embodiment of the company or, one could say, they hear and speak through the persona of the company, within their appropriate sphere, and their mind is the mind of the company.”
Under the identification doctrine, only if the individual who is the embodiment of the company is found guilty, the company can be convicted. Where there is insufficient evidence to convict the individual, any prosecution of the company must fail. So only few corporations could be successfully prosecuted in applying the identification principle. To overcome such limitations of the identification principle, “The Corporate Manslaughter and Corporate Homicide Act 2007” was brought into force in 2008. The act creates a new offence called corporate manslaughter. An organization will be guilty of the new offence if the way in which its activities are managed or organized causes a death and amounts to a gross breach of a duty of care to the deceased.
The structural foundations of corporate liability have developed differently in the United States federal jurisdiction. In the United States, the criminal liability of a corporation is acknowledged primarily on the basis of the vicarious liability. But, contrary to the UK, where the vicarious liability of a corporation is restricted to strict liability cases and statute offenses, a vicarious form of liability applies in mens rea offenses as well as strict liability cases in the United States. That is, a corporation is criminally liable if a member of the corporation commits a crime within the scope of employment and at least in part with the motive to benefit the corporation and the act and intent can be imputed to the corporation, even if the offence requires mens rea.
If corporations are found guilty, they are punished pursuant to the Organizational Sentencing Guidelines promulgated by the U.S. Sentencing Commission. Also, when a corporation is convicted of an offence, the court may impose a fine which is calculated based on either the victim's loss or the defendant's gain multiplied by a factor set forth in the United States Sentencing Guidelines. The United States Supreme Court has held that the Guidelines are advisory only, but the district courts must consult those Guidelines and take them into account when sentencing.
Whereas corporate criminal responsibility has had a relatively long history in common law jurisdictions, Germany is reluctant to attribute criminal liability to collective entities including corporations and other organizations. In Germany, only administrative fine (Geldbuß) can be imposed on a corporation under the condition that an organ, a representative or a person with control functions of the legal person committed a criminal offence or an administrative infraction by which an obligation of the corporation was violated or the corporation was enriched.
In the German criminal law system, the criminal liability is regarded as something ethical, that is, only an individual and not an organization can commit a crime, because the criminal liability presupposes the ability of autonomy and self-determination. The German Federal Court of Appeals repeatedly declares that “man is directed toward free, responsible moral self-determination” and that only for that reason moral and legal blame can be imposed on him when he commits a crime. The Court also declares that this principle of guilt, the Schuldprinzip, is deeply rooted in the protection of human dignity and the right to develop one’s personality. In this perspective, a corporation cannot be blamed and consequently cannot be criminally liable because it doesn’t have a mental state. It is said that criminal responsibility is an alien concept where, like Germany, criminal responsibility is considered as the result of moral fault.
The basis for corporate criminal liability in French law is codified in Article 121-2 of the new French penal code. Under Article 121-2 of the Code, a corporation is criminally liable if an employee or agent of the corporation commits a crime on its behalf, when the provision that has been breached explicitly declares that the law applies to a corporation. The criminal liability of a corporation does not exclude that of the natural person who can be convicted either as a principal or accomplice for the crime. Also, there are three basic requirements for liability to be imposed under Article 121-2. First, the French legislature must have enacted a criminal offense which a corporation can contravene. Second, a corporation’s representatives or its organs must commit such an offence. Third, the act must have been committed for the benefit of the corporation.