Deferred Prosecution Agreements: Ministry of Justice outlines its final DPA proposals

United Kingdom

On 23 October 2012, the Ministry of Justice (“MoJ”) published its response to its consultation on deferred prosecution agreements (“DPAs”). The response outlines the legislative proposals that will now be introduced as amendments to the Crime and Courts Bill currently before Parliament and sets out the MoJ’s reasoning for its decisions. As the proposals will be added to the existing Bill, we may see the introduction of DPAs in England and Wales as early as next year (although we note that the Impact Assessment assumes that they will not be in use before early 2014). They will be available in connection with wrongdoing that predated their enactment, so the first DPAs could be agreed fairly quickly after their introduction.

The final proposals do not significantly depart from those initially set out in the consultation. However, the response does provide a clearer picture of how the Government expects DPAs to look and be used following their introduction.

For an overview of the original proposals in the consultation, see our previous LawNow here.


The MoJ opened its consultation on DPAs on 17 May 2012. The initial consultation set out the proposed content and processes for formalising DPAs. The stated aim was to give prosecutors a tool to encourage co-operation from, and self-reporting by, corporate offenders and to reduce the costs and difficulties associated with bringing corporate criminal prosecutions for economic offences.

There were 75 responses to the consultation, with almost half coming from law firms. Notably, only 11 commercial organisations and 11 non-legal representative bodies submitted responses, which is a modest number considering they are the group who will be most affected by the introduction of DPAs.

The MoJ’s response summarises the responses it received to the various questions it posed in the consultation and details the DPA scheme as it will now be proposed to Parliament. Generally, the responses appear to show a fairly broad consensus in favour of DPAs as originally proposed. However, there were a few notable issues on which there was a strong divergence of views.

A summary of the final proposals is set out below, but essentially DPAs will be voluntary agreements between the prosecutor and an organisation whereby, in exchange for agreeing to and complying with certain conditions (including, for example, to pay a financial penalty, make reparations, engage an external monitor etc), the prosecutor will defer a criminal prosecution. There will be judicial involvement from an early stage in order to ensure that the prosecutor’s decision to enter into a DPA (and its particular terms) is fair and in the interests of justice. The final terms of the DPA will be approved in open court and published. If the DPA is not complied with, the prosecutor may prosecute the original wrongdoing, but the breach of the DPA will not itself be a criminal offence.

Summary of final proposals

: DPAs will be available in principle to any party who is not an individual (i.e. any organisation, however structured). So the MoJ’s has widened the scope from just “commercial organisations” to all organisations. DPAs will only be available in relation to economic crime, although the MoJ acknowledges that it needs to be flexible in its approach and may, in the future, add to the list of economic crimes to which DPAs may be applied.

Code of Practice: The Directors of Public Prosecutions and the Serious Fraud Office (“SFO”) are to issue guidance in the form of a DPA Code of Practice setting out circumstances in which a prosecutor may consider entering into a DPA, the principles applying to their decision and any factors that may indicate a DPA is unsuitable. There was no firm consensus among respondents on what the Code should cover and the MoJ therefore proposes that its content will be subject to its own consultation in due course.

Guidance on DPA terms: As the Sentencing Council has indicated that it will issue formal sentencing guidelines for many of the sorts of offences that could be covered by DPAs, the MoJ considers that separate guidance to assist parties in considering appropriate terms for DPAs is no longer required.

Preliminary hearing: Any decision to enter into a DPA must be approved by either the Director of Public Prosecutions or the Director of the SFO. As originally proposed, there will then be a private preliminary hearing, where a judge will review whether the prosecutor’s decision to enter into a DPA is ‘in the interests of justice’ and whether the emerging terms are ‘fair, reasonable and proportionate’. Some respondents raised concerns about the judge’s role and reiterated the need for the prosecutor to remain the decision-maker in the process, so that the organisation has certainty that the party with whom it is negotiating is able to deliver any agreement reached. The MoJ has clarified its proposals concerning judicial involvement and explained that the judge will not have order-making powers or wider powers to amend the proposed DPA terms, but may, if necessary, suggest to the prosecutor ways in which a draft DPA might be amended to meet the relevant test, which will then need to be agreed between the parties.

Contents of the DPA: All DPAs will include an agreed statement of facts and an expiry date. Some respondents raised concerns that the inclusion of a statement of facts would amount to an admission of guilt, but the MoJ has confirmed that the statement would not need to include any such admission. In relation to the sorts of terms that may be included in the DPA, the legislation will not provide an exhaustive list, but will instead provide example terms to assist the parties and judges in making their decisions relating to DPAs, acknowledging that each case (and what terms will be appropriate) will turn on its own facts.

Financial penalty: While 94% of respondents agreed that some form of penalty reduction should be included to incentivise the corporate to self-report wrongdoing and enter into the DPA process, over half of the respondents disagreed with the maximum penalty reduction being set at one third – some complaining that it was too high and some too low. However, the MoJ will retain the maximum one third penalty reduction. Their reasoning is that this will mirror the scale of reduction available to those who plead guilty after charge at the first reasonable opportunity. While the MoJ considers that the reduction in the financial penalty and avoidance of a criminal conviction are likely to be the main incentives for corporates to self-report, the level of co-operation a corporate offers the prosecutor may also be reflected in other aspects of the DPA, for example, as to the conditions that may be imposed in relation to the appointment of an external monitor.

Judicial approval of the final DPA: Once agreed between the parties, the final terms of the DPA will be set out before a judge, in private, so that any remaining issues can be resolved. Once resolved, the judge will approve the DPA in open court.

Publicly available information: Once approved, the prosecutor will have to publish the final DPA and details of the court rulings made at the final hearing and, normally, also at any previous private hearings, including the reasons given by the judge at the preliminary hearing for being satisfied that the DPA was, in principle, appropriate. Upon expiry of the DPA, the prosecutor will have to publish details of how the terms were complied with. In the event the DPA is breached, varied or terminated, the prosecutor will have to publish details of the relevant facts and approach taken.

Variation of the DPA terms: The terms of the DPA may only be varied in exceptional circumstances and only with the approval of the court. The only exceptional circumstance identified by the MoJ was where not varying the terms was more likely than not to lead to a breach of the DPA and the circumstances that would give rise to the breach could not have been foreseen when the DPA was agreed. The prosecutor will apply to the court to vary the DPA and the judge will either approve or refuse to approve the proposed variations. The judge will not be empowered to suggest alternative variations to the terms.

Breach of the DPA: In the event of a breach, the prosecutor has discretion to apply to the court to terminate the DPA. The DPA may contain terms which provide penalties for minor breaches of its terms in specific circumstances. This may apply, for example, to late compliance with terms, where a specified financial penalty may be imposed. The civil standard of proof will apply where the court is asked to determine whether there has been a breach. The legislation will set out the options that will be available to the court in the event that the DPA is terminated for breach and the DPA Code of Practice will specify the process for prosecutors in the event of a breach. The court may also, of its own motion terminate the DPA for breach where it is in the interests of justice to do so.

Admissibility of evidence: Following the lack of consensus of responses to this issue, the MoJ has changed its proposals concerning whether information gathered during the DPA process may be used in subsequent proceedings, to take into account not only on the nature of the subsequent proceedings, but also whether the DPA was concluded or not.

Criminal proceedings where the DPA is concluded - Information may be admissible in subsequent proceedings against a corporate following breach of the DPA, but not against an individual.

Civil proceedings where the DPA is concluded – Information may be treated as hearsay evidence in civil proceedings and the court will therefore be entitled to determine the weight of that evidence in those proceedings.

Criminal proceedings where the DPA is not concluded – The prosecutor may not rely on the fact that it conducted DPA negotiations or on any draft DPA created during negotiations which is not subsequently agreed. However, the prosecutor may rely on evidence obtained from enquiries pursued as a result of anything said in any unsigned statement of facts or draft DPA. Any pre-existing material provided by the corporate during the course of the DPA process may be admissible. The MoJ considers that there will only be a narrow range of material created in the course of negotiations capable of being used against the corporate, however, how this will work in practice remains uncertain and may result in corporates taking a more cautious approach to what documents and information is provided to the prosecutor during the early stages of negotiations.

Civil proceedings where the DPA is not concluded – Information will not be disclosed to third parties by the prosecutor unless there is a legal obligation for them to do so; as the DPA was not concluded, the MoJ considered it unlikely that third party claimants would even be aware that the SFO or DPP may hold relevant information or seek disclosure of it.

Disclosure: The common law obligations of disclosure will apply to the DPA process (i.e. the prosecutor must consider what disclosure should be made to the corporate in accordance with the principles of justice and fairness). This should ensure that the corporate is not misled as to the strength of the case against it during the DPA negotiations and can make a fair assessment of whether or not it is in its interests to enter into the DPA.

Potential for judicial review: The judge’s decision to approve a DPA will not be subject to judicial review; however, the prosecutor’s decision to enter into a DPA in the first place may be challenged.

Retrospective effect: DPAs will be available in relation to wrongdoing that took place before the legislation introducing them came into effect, so long as criminal proceedings have not already commenced.


The MoJ’s proposal to offer prosecutors a new tool to tackle corporate economic crime is a welcome development, but whether the proposals go far enough to further the Government’s aims remains to be seen. While dismissing calls for a larger reduction in penalty from some corners, in order better to incentivise self-reporting, the MoJ’s response does not explain why it considers corporates would now be more incentivised to self-report wrongdoing that was unlikely otherwise ever to be discovered by the ever more resource-challenged authorities tasked with prosecuting these crimes. The MoJ’s view is that the avoidance of a criminal conviction when coupled with the possibility of a one-third reduction would provide this additional incentive. However, a corporate could instead choose to run the risk of discovery and then admit culpability at the earliest opportunity to obtain a similar sentence reduction at that stage.

During the course of the consultation there were concerns as to whether DPAs would offer more of an incentive than the “favourable” treatment offered to corporates who self-reported under the SFO’s self-reporting regime, set out in their “Approach of the Serious Fraud Office to dealing with Overseas Corruption”. However, that policy was very recently shelved by the SFO, removing that issue from the debate.

Notwithstanding the potential benefits of DPAs, these proposals fail to address the underlying problems with the corporate criminal liability test (i.e. the “directing mind and will” test), which has made it so difficult successfully to prosecute corporate crime. An overhaul of this test to reflect the modern business world and how decision-making is conducted in large businesses is what prosecutors really need to help them bring wrongdoing corporates to justice, but there appears to be no appetite to try to deal with this issue now.

Similarly, modern international commerce with businesses operating in multiple states has exposed difficulties caused by jurisdictional clashes and the different ways in which states apply the “double jeopardy” rule. This has in some cases prevented UK prosecutors from punishing UK corporate offenders when the authorities in other jurisdictions are also investigating or prosecuting the same offences. That is not an issue which can be resolved through DPAs alone, but it is a modern problem that is only likely to get worse if not tackled.

A copy of the MoJ’s response is available here.