French court clarifies foreign bribery law, but restricts it

In July, the Paris Regional Criminal Court acquitted French oil company Total SA and its managers of foreign bribery charges in the infamous Oil For Food case.

The decision was long awaited. A few months earlier, the OECD Working group on bribery had published a mixed evaluation report on France, voicing concerns over the lack of foreign bribery convictions and clarity of the legal framework. The OECD Working group highlighted that only one legal person had ever been sentenced by a French court on the charge of foreign bribery but, aware of the upcoming Oil For Food decision, expressed hope that “the situation may slightly evolve in the near future.”

Although the decision was disappointing for some, it did help clarify the interpretation of French foreign bribery laws. In a lengthy analysis, the tribunal found that because Iraqi officials ordered the commissions to secure contracts for the purchase of oil barrels in the name and interest of the government, rather than their own interests, they could not be qualified as “foreign public officials” under French law, and therefore Total could not have committed the offence of foreign bribery.

This interpretation concurs with the one developed a few years ago by the U.S. Department of Justice, which decided not to allege violation of the FCPA in the Oil For Food cases because payments were made to the Iraqi government and not to Iraqi officials. For this reason, it is unlikely that the OECD Working group will heavily scrutinize the French decision during France’s next evaluation, as it seems that the U.S., of all member countries of the OECD Convention, generally observe the highest standards when it comes to fighting foreign bribery.

Even so, one could argue that the legal interpretation given by the French judges is restrictive. They added a second ground to the decision’s rationale, finding that the qualification of foreign bribery requires showing the “enrichment” of the bribed party, which the prosecution had failed to do. This “enrichment” requirement is not written in French law and seems to go against the OECD Convention, which provides that the foreign bribery offence should be found regardless of the “results” of the advantage granted in exchange for a bribe.

The decision was appealed and should be judged again in 2014 or 2015.

___________

Elisabeth Danon is a legal analyst at the World Bank, where she specializes in public procurement. She holds an LL.M. in International Business and Economic Law from Georgetown University Law Center and a law degree from Université Paris X Nanterre (France). She is admitted to practice law in the state of New York. Prior to joining the World Bank, Elisabeth worked at the Anti-corruption Division of the OECD. She can be contacted here.