On March 27, 2018, the Canadian Government announced the introduction of legislative amendments to bring deferred prosecution agreements (“DPA”) to Canada.  The legislation, which would create the “Remediation Agreement Regime” (“RAR”), follows a global trend.  In recent years, DPA regimes have been introduced in the U.K. and France, and considered in a variety of other common law jurisdictions including Singapore and Australia.  Although broadly patterned on an approach pioneered in the United States, like the statutory enactments in other countries adopted more recently, the Canadian RAR regime is likely to be considerably more structured and involve much more substantive judicial supervision.

Background

DPAs and NPAs are used to resolve complex criminal investigations by means of a voluntary agreement between prosecutors and corporate defendants.  Typically, under a DPA, a corporate defendant is granted deferral or suspension of prosecution in exchange for compliance with certain agreed-upon terms—often including monetary penalties, remediation and in some instances, the imposition of a compliance monitor.  This allows law enforcement to address financial crimes through the cooperation of corporate entities, significantly reducing the costs and time required to undertake complex investigations.

The proposal to introduce the RAR in Canada follows a global trend of adopting DPA and non-prosecution agreement (NPA) legal frameworks, with counties like Australia and Singapore recently proposing their own versions modeled after those from the United States and the United Kingdom.[1]  While these regimes continue to take shape, in the last year, the DPAs entered into in U.K. and France have provided greater insight as to the level of cooperation expected by the authorities in those jurisdiction in order for corporations to secure a DPA.[2]

The Proposed Canadian RAR Scheme

Under current law, companies and individuals in Canada who self-disclose potential criminal conduct, such as bribery or corruption, risk criminal prosecution.  There is no existing scheme that formally incentivizes such disclosures.  Rather, because of the risk of prosecution, there is effectively a disincentive to disclose criminal conduct to Canadian authorities.

The proposed RAR scheme would change that.  Under the RAR, in appropriate cases Canadian prosecutors may file criminal charges and then defer prosecution, with charges being ultimately dismissed in the event that the defendant complies with various stipulated conditions.  The proposed RAR scheme announced in Canada grows out of a public consultation process that was initiated in the fall of 2017, which sought feedback about the potential adoption of a DPA regime to address corporate crime.  A report detailing the results of the consultation notes that the majority of participants supported the adoption of a Canadian DPA regime as a useful means for Canadian prosecutors to address certain corporate crimes.[3]

While many of the specific terms of the proposed RAR remain to be defined, a few high-level observations from the results of the consultation may provide insight as to how this DPA regime will take shape:

  1. The RAR is designed to provide prosecutors with an additional tool, the use of which is discretionary. Similar to the U.K. model, however, a majority of commentators supported strong and active judicial oversight over the DPA process.
  2. Similar to the requirements to qualify for a DPA in other jurisdictions, Canadian prosecutors will likely be required to consider the extent of the company’s cooperation, history of similar misconduct, enhancements to compliance measures and other remediating steps, and the potential collateral consequences of a conviction. Commentators supported the articulation of clear guidelines for when a DPA is appropriate, potentially enshrined in the final law.
  3. Under the regime, DPAs will likely only be available to organizations—corporations, firms, partnerships and trade unions—and will not be expanded to include individual wrongdoers.

It is not yet settled which offenses would be eligible for resolution through a DPA.  The majority of commentators supported, at least, giving prosecutors the option of using the RAR to resolve economic offences, including fraud, bribery, money laundering, and offences under the Corruption of Foreign Public Officials Act (a Canadian law akin to the U.S. Foreign Corrupt Practices Act) and the Competition Act.

Next Steps

The proposed RAR legislation was introduced on March 27, 2018 as part of the 2018 Budget implementation bill.  This legislation, which would amend the Criminal Code, must be approved by Canadian Parliament and may be further amended as it goes through the legislative process.  It will not formally take effect until 90 days after the 2018 Budget implementation bill becomes law.

[1] For a more in-depth discussion of these DPA regimes, please see our prior post:  https://www.clearyenforcementwatch.com/2018/02/look-proposed-singapore-deferred-prosecution-agreement-dpa-legislation/.

[2] For a more in-depth review of these DPAs, please see our post:  https://www.clearyenforcementwatch.com/wp-content/uploads/sites/487/2018/02/2018-02-15-cross-border-investigations-a-look-back-on-2017-and-ahead-to-2018.pdf.

[3] The report is available at:  https://www.tpsgc-pwgsc.gc.ca/ci-if/ar-cw/rapport-report-eng.html#s1.