Thanks to Marco Boscariol for collaborating on this article
On January 11, 2023, the Italian Supreme Court[1] ruled again on the meaning of the organizational fault of the company as an element for assessing corporate criminal liability under Legislative Decree No. 231/2001 (“Law 231”)[2], by stating that corporate criminal liability must be specifically ascertained, and not confused nor overlapped with the criminal liability of the individual responsible for the relevant predicate offense.
The case at hand and the decision of the Court of Appeals
The case at hand was concerned with the death of an employee in the workplaces due to a lack of required health and safety measures. In detail, an employee working on scaffolding in a tunnel was struck by a retaining plank; due to the lack of safety measures, the employee fell and then died an hour later. It was later determined that employees working in that area did not have personal protective equipment and that there was no fall prevention rope or safety line. In addition, there was no evidence that employees had received an appropriate health and safety training, before.
In light of above, the Court of Appeals had established corporate criminal liability over the company, as it had benefited from the predicated offense committed by the sole director. The benefit would have consisted in the financial savings resulting from the following elements: (i) the employees on the worksite were formally employed by a different entity but were actually subject to the company’s management power; (ii) the company had failed to provide the workers with suitable personal protective equipment; (iii) there was no evidence of employee training specifically with respect to health and safety measures; and (iv) there was no company-appointed supervisor in such area.
The decision of the Italian Supreme Court
The Italian Supreme Court reversed the judgment of the Court of Appeals and took the opportunity to reaffirm useful clarifications on how to ascertain the existence of organizational fault in order to assess corporate criminal liability.
Indeed, the Italian Supreme Court remarked that corporate criminal liability of legal entities for predicate offenses essentially consists of the following elements:
- principal-agent relationship between the entity and the person who committed the predicate crime;
- commission of the predicate offense in the interest or to the benefit of the entity;
- the entity’s failure to establish a set of organizational and management preventive measures or compliance programs suitable to avoid commission of predicate offenses of the type of those carried out, e., the so-called “organizational fault” (ITA: Colpa d’Organizzazione);
- chain of causation linking the predicate crime to organizational fault.
Organizational fault thus becomes a standard of culpability of the company, that cannot overlap with the liability of the person who committed the predicate offense. In other words, corporate criminal liability exists only if the criminal conduct of the company’s associate took place in the context of a negligent corporate organization that permitted such criminal conduct.
In light of the above, the Italian Supreme Court stated that the director’s criminal liability cannot automatically trigger the recognition of corporate criminal liability, as company’s organizational fault must be specifically demonstrated by the prosecutor. Conversely, the Court of Appeals had not specifically investigated the aspects related to the effective organizational structure adopted by the company for the prevention of the relevant predicate offense, in order to highlight the existence of any cautionary deficit specific to that structure and causally connected with the predicate offense[3]. Indeed, recognition of corporate criminal liability had been based on a generic statement about the inadequacy of Model 231, without providing specific evidence of the company’s organizational fault.
On these grounds, the Italian Supreme Court annulled the previous decision of the Court of Appeals.
[1] Italian Supreme Court, Section IV, decision No. 570/2023.
[2] Please see our previous article on this matter at the following link: https://portolano.it/newsletter/portolano-cavallo-inform-compliance/the-meaning-of-organizational-fault-in-the-latest-rulings-from-italian-courts.
[3] E.g., it charged the company to have not carried out any adequate assessment on suppliers, despite the Model 231 of the company expressly provided for a specific policy in this sense, as well as a proper H&S policy.
