Liability of legal persons under Greek law - Lexology
A) Introductory remarks
As the participation of legal persons in economic life is constantly expanding, issues are increasingly emerging concerning their responsibility for committing illegal acts. A basic principle of criminal law, not only in Greece, but also in other countries of continental Europe, such as Germany, is the principle that criminal responsibility is attributed only to natural persons and not to legal persons, according to the principle “societas delinquere non potest”, according to which legal persons cannot become subjects of criminal liability. This principle is based on the prevailing view that legal persons are only considered to be subjects of rights and obligations by legal fiction, since their will is expressed through the acts and omissions of their organs. Moreover, in accordance with the fundamental principle of guilt under criminal law, a condition for the attribution of criminal liability is the ability to attribute the act to its perpetrator. A characteristic consequence of this principle is the personal character of the majority of penalties, in particular of the custodial sentence, which makes it impossible to impose them on legal persons.
However, the risk of infringement of legal goods resulting from the action of legal persons, as well as the difficulty of identifying the responsible natural persons, make it necessary to adopt provisions which will impose effective, proportionate and dissuasive penalties on legal persons. Moreover, in cases where natural persons act on behalf of or for the benefit of the legal person, it cannot be considered that it has no liability.
B) Legislative initiatives of the EU
At E.U. level, there have been several legislative initiatives concerning the liability of legal persons. The E.U. provided Member States with the option of choosing the means of achieving the set objectives, as the States themselves determined the nature of the sanctions imposed on legal persons, i.e. whether they would be of a criminal, administrative or civil nature. Following the entry into force of the Treaty of Lisbon and the conferral on the EU of direct criminal legislative competence on the basis of Article 83 par. 1 and 2 (Treaty on the Functioning of the E.U.), the directives now adopted on the basis of Article 83 TFEU not only define the objective pursued, but also form the minimum content of criminal provisions. This leads to the specification, through the European legislation, of the minimum constituent elements of the criminal offences and of the lower limit of the penalties to be imposed. As a counterbalance, it is granted to member-states under Article 83 par. 3 the possibility of suspending the legislative procedures of par. 1 and 2, in case they consider that fundamental aspects of their criminal system are affected.
The system of criminal liability of legal persons had already been predicted in several Framework-Decisions and, given that it can now be included in the regulatory scope of Directives, it creates problems of compatibility with the legal systems of many Member States, such as Greece, as it is incompatible to the fundamental principle of guilt. The Framework Decisions have been gradually replaced by Directives, which, although they could give a criminal character to the liability of legal persons and thus introduce criminal sanctions against them, choose not to determine the nature of this responsibility by leaving the decision to the national legislator. Therefore, the EU legislator, aware of the objections that would be raised by some Member States, decided not to make the introduction of criminal liability of legal persons mandatory.
C) Administrative Liability of Legal Persons under Greek law
Greece is one of the most rigid countries for the observance of the doctrine of “societas delinquere non potest” and in most cases provides for the imposition of administrative sanctions against legal persons. The Greek legislator usually chooses to determine as criminal offences the acts or omissions of representatives of legal entities and thus forms particular crimes, the commission of which presupposes that the offender has the status of the representative or of the manager of the legal person.
The practice followed by the legislator when incorporating EU regulations is also the same. Relevant examples are Law No. 1882/1990 on non-payment of debts to the State, Law No. 2523/1997 on tax offences, Law No. 2960/2001 on customs offences, Law No. 3959/2011 on the protection of free competition, etc. In such cases, administrative penalties are imposed on legal persons, provided that the criminal offence is committed by the natural person who is the representative or the director. Administrative penalties that are usually imposed are fines, temporary withdrawal or revocation of the business license, publication in the Press of the penalties imposed and exclusion from public benefits, subsidies or tenders. In many cases, these administrative penalties are extremely onerous for the legal person, i.e., imposing extremely high fines. In any event, however, they cannot be regarded as equally deterrent as the imposition of a criminal sanction. Moreover, when an administrative sanction can be regarded as a “hidden sentence” because of its severity, the procedure for its enforcement must be accompanied by the legal guarantees which are granted in the criminal proceedings, as the European Court of Human Rights has also held.
D) Exceptional provision for criminal liability of Legal Entities
There have been some isolated provisions of criminal liability of legal persons under Greek law. Article 4 of Law No. 4042/2012, regarding the Criminal Protection of the environment, provides for the criminal liability of legal persons if the offence was committed for the benefit of the legal person by a person holding a leading position, whether he acts individually or as a member of an organ of the legal person, but also in the event that there is a lack of control or supervision by that person and thus it was made possible for the offence to be committed for the benefit of the legal person. In this case too, however, the criminal prosecution of the responsible natural persons is not excluded. According to Article 5 of the Law, the penalties that may be imposed against the legal person are: administrative fine, a temporary or permanent prohibition on the exercise of the business activity, a temporary or permanent exclusion from public aid and the publication of the irrevocable conviction. Apart from the fine, the other three penalties appear to be of a criminal nature. However, since that fine may also amount to three times the benefit obtained or sought, due to its severity, it looks alike a criminal sanction.
The above-mentioned law No. 4042/2012 creates a guarantee role of senior management for the environment. However, their liability for the violation of duty of care is not strictly objective, as it is subject to rebuttal.
The core of the wrongdoing of the legal person lies in structural weaknesses, that is to say, lack of proper organization, that leaves room for actions of infringement. Thus, it would be more appropriate to provide for liability in cases: a) of lack of rules regulating the lawful action of the company or b) even in the case of the existence of such rules, in cases of inadequate supervision of their application. Such criminal liability is established for supervisors, directors, inspectors, etc. based on articles 235 par. 4 (employee bribery) and 159A par. 3 (bribery of politicians) of the Criminal Code.
E) Remarks
In contrast to the usually low dissuasive effect of administrative penalties, the imposition of criminal sanctions is more effective in its general preventive function. And especially if we take into account the difficulty of identifying the natural person who should be held responsible for the crime, mainly because of the contribution of more executives to the corporate action from which this act originated, it becomes clear that the adoption of criminal liability for the legal person itself is necessary. In the law-systems of the U.S.A. and England, the above-mentioned reasons led to the introduction of the criminal liability of legal persons.
On the other hand, the dogmatic principles prevailing in Greek criminal law do not seem to leave any room for the adoption of criminal liability of legal persons. Criminal law punishes only human behavior after ascertaining the liability of a specific natural person as in accordance with the constitutionally guaranteed principle of guilt based on Article 2 par. 1 of the Constitution, according to which the imposition of a penalty presupposes the attribution of an unjust act to an offender who has subjective liability for it.
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