Administrative Liability of Legal Entity: Problems and Solutions Proving the Fault of Legal Entity
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Abstract
Legal entities are active participants in legal relations and are able to violate laws, thus they should carry the liability.
Liability of legal entities was seen as unproblematic in the civil liability context where presumption of fault exists. In liability for administrative violations (administrative liability) the principle of the presumption of innocence of a person against whom administrative violations proceedings have been initiated, exists i.e. administrative liability of legal entities shall occur if fault exists. But the elements of fault consist of human traits and a legal entity is not a human, it’s rather an abstraction. The difficulty proving the fault of legal entity occurs and the theoretical question arises: how to prove the fault of legal entity.
Administrative liability is similar to criminal liability therefore these questions may be answered by using theories analyzing criminal liability of legal entities. Those theories are vicarious liability, alter ego (identification) and corporate culture theories.
Under the theory of vicarious liability, a legal entity may be liable for the acts of its employees, agents or any person for whom it is responsible. This theory might be suitable in attributing administrative liability to legal entities.
Under alter ego (identification) theory, there is an identity between the legal entity and the persons who constitute its directing mind, that is, the individuals (officers or managerial level employees) whose duties within the firm are such that in the course of their duties they do not take orders or directives from a higher authority within the organization. The commission of an offence by a person or group of persons identified with the organization therefore constitutes an offence by the corporation as well. This doctrine also might be suitable in attributing administrative liability to legal entities.
Corporate culture theory might be suitable as well in the context of administrative liability of legal entities. Under this theory the fault of legal entity might be proven directly. For the purposes of attributing liability, corporate culture refers primarily to the chain of command, the decision-making structure and the general atmosphere concerning obedience to the law. This notion, especially in the case of very large entities, considers such things as the goals pursued by the firm, the corporate setting, the organizational pressures and the prevailing mentality as factors that may have promoted the commission of an offence.
Thus, by using vicarious liability, alter ego (identification) and corporate culture theories the fault of legal entity might be established and administrative liability to legal entity might be attributed.
Theoretical conclusions might be confirmed by looking at the practical side of the problem, i.e. whether in some states (Lithuania, Russia and France) legal entities are recognized as subjects of administrative liability?
The Lithuanian Code of Administrative Violations does not expressly define that the subject of administrative liability is only an individual. The systematic analysis of Lithuanian laws showed that legal entity is recognized as the subject of administrative liability. The draft of Lithuanian Code of Administrative Violations clearly establishes administrative liability of legal entities.
The new Russian Federation Code of Administrative Violations extends administrative liability to legal entities. Liability for administrative violations shall occur if fault exists.
The existence of fault is an obligatory condition for imposing administrative liability on an entity.
In France the subjects of administrative liability are only public bodies and civil servants. But private legal entities may be held liable for administrative violations. The fault of legal entities may occur by establishing the fault of representatives or the governing bodies of legal entities.
Liability of legal entities was seen as unproblematic in the civil liability context where presumption of fault exists. In liability for administrative violations (administrative liability) the principle of the presumption of innocence of a person against whom administrative violations proceedings have been initiated, exists i.e. administrative liability of legal entities shall occur if fault exists. But the elements of fault consist of human traits and a legal entity is not a human, it’s rather an abstraction. The difficulty proving the fault of legal entity occurs and the theoretical question arises: how to prove the fault of legal entity.
Administrative liability is similar to criminal liability therefore these questions may be answered by using theories analyzing criminal liability of legal entities. Those theories are vicarious liability, alter ego (identification) and corporate culture theories.
Under the theory of vicarious liability, a legal entity may be liable for the acts of its employees, agents or any person for whom it is responsible. This theory might be suitable in attributing administrative liability to legal entities.
Under alter ego (identification) theory, there is an identity between the legal entity and the persons who constitute its directing mind, that is, the individuals (officers or managerial level employees) whose duties within the firm are such that in the course of their duties they do not take orders or directives from a higher authority within the organization. The commission of an offence by a person or group of persons identified with the organization therefore constitutes an offence by the corporation as well. This doctrine also might be suitable in attributing administrative liability to legal entities.
Corporate culture theory might be suitable as well in the context of administrative liability of legal entities. Under this theory the fault of legal entity might be proven directly. For the purposes of attributing liability, corporate culture refers primarily to the chain of command, the decision-making structure and the general atmosphere concerning obedience to the law. This notion, especially in the case of very large entities, considers such things as the goals pursued by the firm, the corporate setting, the organizational pressures and the prevailing mentality as factors that may have promoted the commission of an offence.
Thus, by using vicarious liability, alter ego (identification) and corporate culture theories the fault of legal entity might be established and administrative liability to legal entity might be attributed.
Theoretical conclusions might be confirmed by looking at the practical side of the problem, i.e. whether in some states (Lithuania, Russia and France) legal entities are recognized as subjects of administrative liability?
The Lithuanian Code of Administrative Violations does not expressly define that the subject of administrative liability is only an individual. The systematic analysis of Lithuanian laws showed that legal entity is recognized as the subject of administrative liability. The draft of Lithuanian Code of Administrative Violations clearly establishes administrative liability of legal entities.
The new Russian Federation Code of Administrative Violations extends administrative liability to legal entities. Liability for administrative violations shall occur if fault exists.
The existence of fault is an obligatory condition for imposing administrative liability on an entity.
In France the subjects of administrative liability are only public bodies and civil servants. But private legal entities may be held liable for administrative violations. The fault of legal entities may occur by establishing the fault of representatives or the governing bodies of legal entities.
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Please see Copyright and Licence Agreement for further details.
