Updated: Sept. 1, 2018 (Initial publication: May 10, 2018)

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Enterprise, Regulator, Judge: Think Compliance by these three characters

by Marie-Anne Frison-Roche

ComplianceTech©. Pour lire le document de travail en français, cliquer sur le drapeau français

This working paper has served  as a basis for an article written in French in the book Compliance : Entreprise, Régulateur, Juge ("Compliance: Enterprise, Regulator, Judge"), published in May 2018 in the Regulations Series of Dalloz editions (Paris).

See the other books published in this collection (presentation in French), directed by Marie-Anne Frison-Roche (presentation in English).


ABSTRACT: The Company, the Regulator and the Judge are three key figures for the construction of an emerging Law of Compliance. An important risk lies in a confusion of their respective roles, the company becoming a regulator, the regulator becoming a board of a place that goes to the conquest of others, the judge standing back. It is appropriate that each plays his role and that their respective function is not distorted. If this confusion is avoided, then the points of contact can multiply and one observes it. But as soon as everyone remains in their place, we can go further than these points of contact and if they agreed, the three characters can reach common goals. This is all the more legitimate since the Law of Compliance, as the Law of Regulation, is teleological in nature, which makes these branches of law profoundly political. These common goals are technical, such as risk prevention. They can be more political and higher, if there is a shared will, without ever one of the characters being captured by another: it is then to concern by the human being. The designation of this common goal to the Company, the Regulator and the Judge can be expressed in one word: Europe.

 

Compliance: when a branch of Law is still in the bubbling of its birth!footnote-1106, that its definition is still very discussed!footnote-1105 and that its contours emerge!footnote-1113, one can seek to find points of agreement by a geometrical figure that reduces to simplicity.

The Law of Compliance could take the form of the "circle" because the circle is this closed and reassuring figure within which the confidence is growing!footnote-1107. The circle was the ancient figure of perfection, it remains in Asia. Confidence rests here on the unity between people who know and esteem each other, who are familiar with the same things, who have echoed each other, a classic formulation by a feature of the economic theory of reputation. The circle is the crucible of a trust that is at a distance from the very far, the different, the stranger, the one who does not speak the same language (for example the language of another discipline!!footnote-1114). Circles of trust are superimposed and reinforce one another with success in the figure of the Market!footnote-1117 which is inherently inverse, in that it is an open figure!footnote-1108.

Not only are the two figures upside down, but one has taken the quality yet inseparable from the other. In fact, the association between perfection and this figure of the closed, limited circle, which turns on itself, has been broken by what has given wings to the West Word, its exact opposite: the opening, the absence of limit, to which has been attached the pursuit of perfection. The ambition of conquest, including nature!footnote-1118, became an object of mastery, was the perspective that constituted the flight ramp to the uncertain, the stranger, the unknown, giving body to the most beautiful destinies, for magnificent character: the adventurer.

This one would not be afraid to fall while going all the way to the end of the flat Earth. It is to this spirit of openness and "without limit" that perfection was attached (science, technology, etc.). The Western man made the "bet", in a way of which Dany-Robert Dufour!footnote-1115 showed the proximity between Jansenism and the economic theories of liberalism. Western man thus discovered the infinitely large and the infinitely small. Today in the same spirit of adventure, this young adventurer is building the digital world!footnote-1119.

But in a such open world of adventures, risks, fortunes and gambling!footnote-1121, this character referred to by the term "entrepreneur", French word that traveled so well that we are sent today as a kind of Common Law and American Business  lesson, has above all confidence in himself. He also has some friends, with them to found a company, because the English term of start-up does not add to the affectio societatis of the contract of society, which aims at the same starting movement in which the affective has its necessary part .

If the business becomes more complex because it unfolds beyond this first movement, if the world becomes more complex because it is structured beyond the welcome emptiness of freedom, then the question of trust in beyond the agent arises. The observer must find a geometrical figure less easily to restore what produces, preserves and diffuses confidence!footnote-1107.

Then appear three characters, who are presented in turn as very powerful or very weak: the Company, the Regulator and the Judge. They keep talking to each other, sometimes in disappointment, or suddenly to devote themselves respectively to the gémonies, often to attribute themselves the beautiful role. Who would not? They are indeed three key characters to build a Compliance Law from the current magma of compliance devices where only bricks are available  (I). Each one has its specific role and the great risk, engendered by the Compliance itself, lies in the confusion between these characters, the company becoming judge, the regulator becoming company, the judge becoming regulator, etc. To get out of such a whirlwind, even as the Compliance internalizes in private operators "monumental goals" that are the concern of external public institutions!footnote-1116, we must raise the ambition of the Law of Compliance.

If the Law of Compliance is not aiming at the mere conformity of behavior to regulation, a poor and breathless definition, but adopts "monumental goals" or even aims at European goals, such as the construction of Europe itself, then without exchanging their respective places, the Company, the Regulator and the Judge can privilege points of contact, even achieve common goals, without exchanging roles ((II).

Because if to follow Pirandello characters tried to endlessly repeat a play without Author, which spoiled the repetition, it took all the fact that no one knew in advance to which end to move forward. It is not so much the Author that was missing as the end in advance chosen. Thus, it does not matter that we do not clearly identify the sources of the Law, if we understand the Story, maybe the History, that is to say that we know the end in advance. No need for a single author if we do not depend on the owl of Minerva which will deign to get up at a twilight that will never come, as soon as the three characters have points of contact and have a common purpose (III).

But here, there can be one. This goal must be clear, simple and common; while each keeps his role, in a room for which there has been and there will be multiple repetitions. The hesitations, errors and clashes do not mean that the play is bad and will never be played. Indeed, and if we had to find a simple geometric form that reflects what the Law of Compliance should be, it would be a triangle, each point of which would be occupied by the Company, the Regulator and the Judge, each retaining its nature. but in the same adventure where everyone could participate in the same History: here and now, it is about Europe.

 

 

I. TROIS THREE CAPITAL CHARACTERS EACH IN THE MATTER CONCERNING IT FOR THE CONSTRUCTION OF THE LAW OF COMPLIANCE

In the construction of the Law of Compliance, the three characters greet from the beginning of the play, each taking his role (A), but to observe them move one can fear confusion in the roles of each other (B) .

 

A. THE ROLE OF EACH CHARACTER IN THE CONSTRUCTION OF THE LAW OF COMPLIANCE

The Company is by definition a character because Compliance forces it to go out of its passivity to force it to be an active character. This "forced actor" of the Compliance system only has a role in the room because of a distribution that it has not alway chosen (1). The Regulator conversely moves in the Law of Compliance with more ease; he is on the right side of the neck because it is he who makes penetrate rules which he entrusts custody to companies, he is a "natural actor" (2). As for the Judge, as in any mechanism of law, he is the one before whom everything and everyone return (3).

 

1. The Company, a character of Compliance as it has a role to play

The company, as a subject of law, is subject to the rules of law. Tautology .... But Compliance can not just express this principle, it would be a pleonasm of the situation of each. A company that commits itself by an act of compliance can not simply assert the respect that it has for the Law because it can not in any case evade the status of legal person that it shares with all.

The Company is by nature a "Compliance Character" for other reasons. It becomes so because it commits itself to do so, then taking an active concern as the protection of the environment, or because it undergoes special rules that apply to it as it is a particular company. It is then constrained in so far as it has specificities that other legal subjects do not have, nor even the other companies: in particular because the Company is "in position" to have information that the others have not, for example, about money laundering.

The Company therefore has a "role to play" with regard to concerns such as the protection of markets, the protection of the planet or human beings, a role played by coercion or a self-will that is self-sufficient. In the latter case, the issue of "authors" moves as it is no longer the regulators - Americans - who write the prescriptions of behaviors but the companies themselves.

This explains the interference between "codes of conduct" and the Law of Compliance.

Companies are free not to write such codes of conduct that force them beyond their legal obligations (because writing that they obey the law is meaningless). They are free to choose the goals to achieve and the means to achieve them, to write this in their own way, not to do so under the dictation of a judge or a regulator. They are free not to do so in a language other than that of the country in which they are moving or in the legal language of the legal system to which they belong. It is by doing this that the Company is not a "performer" but a character of the Law of Compliance.

The distinction between the "dictated" Code of Conduct and the "chosen" Code of Conduct - that is, the Company is really the Author!footnote-1296 is important because the Company may be obliged to such an adoption, either by its activity (for example it is a bank) or by its nature because it is a "crucial operator" or by its previous behavior, a Compliance sanction including the adoption of a Code of Conduct. Judges and regulators tend to say that these rules of behavior for the future are "the sole responsibility" of the company, even though it only acts on their injunction!footnote-1297.

 

2. The Regulator, "natural" character of the Compliance 

The Regulator was the first to salute on the scene, probably because he was the first to strike: it was by the sanctions to the astronomical amounts inflicted by the Regulators to the firms that the Compliance has given itself to see!footnote-1298.

If we define the Law of Compliance as the mechanism by which public rules are internalized in global companies so that the power of the latter makes these rules fully effective, the Regulator appears as a kind of bounding character!

Indeed he leapt into companies. Before he was outside, not even scrutinizing to the behaviors of them since the Regulator focuses on the structures of sectors and markets. Through Compliance, the Regulator "leaps" into the companies themselves, by the Supervision!footnote-1299, which leads him to somehow get out of himself!footnote-1300 as he moves away from why he had been instituted.

In Ex Ante, the Regulator sets the rules, which prohibit behaviors, prohibiting with strong voice for example transactions with a particular country!footnote-1301, or murmuring with the sweet voice of the soft law the ways in which it is appropriate to secure the information networks, or to draw the ideal society where finance will borrow from trees the green color of their foliage!footnote-1302.

But it is also the Regulator who, leaping from the Ex Ante to the Ex Post, punishes the essential services companies that have not played their roles well by structuring themselves so that the goals set by the Regulator are achieved by the only forces of the private operator!footnote-1303. Here is a Regulator who expresses both a great proximity with companies, since he now sits at the board table and therefore shares its concerns!footnote-1303 ; but it is because the Compliance is intimate of the Regulation Law, aiming at the integrity of the markets, the quality of the information, the solidity of the systems, that the Regulator, bastion advanced of the Regulatory Law, can not to be anything other than the "natural" character of the Compliance Law.

But it is also the Regulator who, leaping from the Ex Ante to the Ex Post, punishes the companies that have not played their roles by structuring themselves so that the goals set by the Regulator are achieved by the only forces of the private operator!footnote-1303. Here is a Regulator who expresses both a great proximity with companies, since he now sits at the board table and therefore shares their concerns !footnote-1304 ; but it is because the Compliance is intimate of the Regulation, aiming at the integrity of the markets, the quality of the information, the solidity of the systems, that the Regulator, bastion advanced of the Regulatory  Law of the Regulation, can not to be anything other than the "natural" character of the Compliance Law.

 

3. The Judge, the one to whom everyone returns

The Judge will always be there. Because he is central in Regulation Law!footnote-1305, the Compliance Law being linked to Regulation Law, the Judge present in Regulation can only be present in Compliance. But he will be even more so. Indeed, first and foremost because the Law of Compliance is a legal corpus so severe that under the wrath of sanctions, it is with the Judge that companies want to seek refuge against the Ex Post control of the regulators.

Secondly as in the case of regulatory systems, the regulators themselves take the form of a court in the matter of compliance!footnote-1307. Thus the judge, if he does not intervene in person - through an appeal against the regulator's decision, prints his form, including his procedural requirements. With Compliance, the model of "governance" is that of an impartial tribunal!footnote-1306.

Thirdly, because Compliance is developing in this kind of desert, which is globalization!footnote-1308,, it takes the form of the first and fundamental Tort Law!footnote-1309, which always brings back before the judge, judge who expresses with motivation what may be the set of first principles of a future system, be it international or the backbone of a new legal area, such as Europe is able to be. Indeed, if Compliance consists to be accountable, linked to "governance" and "accountability", then responsibility is at its heart, and it is always before a Judge that it develops. , including in so-called Civil Law countries.

In this, it makes no sense to put the Compliance on the side of the British or American Law, since the Law of Compliance is mainly built on Ex Ante, the company being "the author"!footnote-1310 of the system of rules and the guardian of them (a sort of legislator and administration) which refers to a Roman-Germanic conception of the Law, while the principle of responsibility of which the designer is the judge is as powerful in this conception as is in common law systems.

These three roles can evolve, become rich and nuanced; the bottom line is that there is no mixing of genres. But is not this the biggest risk of Compliance Law?

 

B. THE MAJOR RISK OF COMPLIANCE: THE CONFUSION BETWEEN THE COMPANY, THE REGULATOR AND THE JUDGE

When we read the guidelines, the codes of conduct, the laws and regulations, the many studies on the subject, notably to the glory of self-regulation, or of Soft Law, or a modest judge who only balances the interests, there is a confusion in the distribution of roles, leading to the transformation of the firm into a regulator, the regulator into a council of a particular economic system, and the judge as a simple adjuster of the system.

In this general confusion, is not the first thing to return to the elementary? : Compliance can not transform the Company into a Regulator or a Judge (1), the Regulator can not be the sole advocate in the service of a particular economic system (2) and the Judge is neither a Regulator nor a simple special interest adjuster (3).

 

1. By Compliance, the risk of transforming the Company into Regulator or Judge

It is true that by the internalization of the Regulatory goals in the structural organization of some companies!footnote-1312 in order to prevent certain globally deleterious behaviors (like corruption)!footnote-13111 or to achieve certain monumental positive goals - like protection of nature!footnote-1315, it is required of the Enterprise that it sanctions itself among the violators, the sanction being the tool of efficiency handled by the one who conceives the organization!footnote-1313. In this, one would be tempted to say that it punishes itself. To respect the procedures, it will have to split into separate bodies to respect the principle of impartiality. It is constrained not only by ethics but by Law. When this function applies to co-contractors, the Company exercises over third parties, sometimes dependent, this power to judge and punish. Codes of Conduct tend to keep a balance between this power of sanction and these dependencies.

In a more general way, by the Codes of conduct the Company enacts behaviors not to adopt, even those to adopt. In this, she turns into Ex Ante Regulator. It is remarkable that the notion of "conduct" is now embedded in the name of the public regulators themselves, as shown by the British Financial Conduct Authority (FCA), a sign of the proximity between the two types of organization, private companies and organizations. public authorities.

Whether the Company does so proprio motu, in the name of self-regulation or a virtuous movement, or that it does so on the constraint of a compliance order, for example in a compliance program provided for in a sentence of compliance pronounced by the judge and followed by an administrative body (in France, the Agence Française Antitcorruption - AFA - the French Anti-Corruption Agency), the result is always the same: the Company becomes endowed with the power to punish, power whose scope is global.

However, if we can blame global companies for monopolizing regulatory power by self-regulation!footnote-1314, we can no longer blame them when it is the Regulator who made them Regulators, while is the Judge who made Judges. The two other characters have forcibly concentrated in the Company the totality of the powers.

But in this comedy boulevard Who loses wins, the Enterprise would not have the role under the guise of being the oppressed role of the Grand Winner, since it is under the order of the Regulator and of the Judge becoming the Great global Regulatory Judge?

If we do not want to be governed solely by global companies, this perspective, of which companies are not the only sources, constitutes a serious risk.

 

 

 

 

1

Pour une bibliographie, voir.

2

V. par ex. Frison-Roche, M.-A., Le Droit de la Compliance, 2016.

3

Frison-Roche, M.-A., Le Droit de la Compliance, 2016.

4

In this sense, Frison-Roche, M.-A., Drawing the circles of Compliance Law, 2017.

5

Et si la Compliance est un ensemble de mécanismes avant tout financiers, l'ordre juridique lui est étranger, est en dehors de son cercle, et la confiance ne pourrait être établie que si le Droit plie en entrant dans une autre logique que la sienne. C'est la conception de l'Analyse Economique du Droit, souvent à l'oeuvre en la matière. Sur une analyse de cela, V. Frison-Roche, M.A., Le Droit est-il un atout ou un handicap pour nos entreprises et nos territoires?, 2017.

6

Frison-Roche, M.-A., Drawing the circles of Compliance Law, 2017.

7

Par nature le marché permet aux opérateurs, aux marchandises et aux capitaux d'entrer et de sortir (prohibition première des barrières à l'entré) . Il ne correspond pas à la figure du cercle, lequel est au contraire par excellence la figure de la fermeture, identifiée en cela à la perfection dans l'Antiquité grecque ou dans la civilisation japonaise par exemple. C'est pourquoi Williamson notamment a montré que le marché a brisé les systèmes sociaux des "cercles", par exemple construits sur les titres.

8

Pour une critique de cela, v. Supiot, A., in Prendre la responsabilité au sérieux.

Pour les conséquences qu'il conviendrait d'en tirer, et en Droit de l'environnement et sur ce qu'il est convenu d'appeler la "finance verte" ou la "finance soutenable".

9

Dufour, D.-R., Le divin marché. La révolution culturelle libérale, Denoël, 2007.

10

Ce que traduit le film Cloud Atlas.

11

Sur le lien étroit entre l'économie actuelle et le jeu, ne serait-ce par par le "bitcoin", v. Frison-Roche, M.-A., Vers l'avenir de la régulation des jeux, 2017.

12

In this sense, Frison-Roche, M.-A., Drawing the circles of Compliance Law, 2017.

13

Frison-Roche, M.-A., From Regulation Law to Compliance Law, 2017.

14

Sur la notion générale d'Auteur, v. infra.

 

15

C'est notamment le cas dans la condamnation par la Commission européenne de Google le 27 juillet 2018, à adopter un nouveau comportement, notamment des nouvelles clauses contractuelles et des nouvelles pratiques, "sous sa seule responsabilité".

16

Sur cette façon dont le Droit de la Compliance est apparu, réaction américaine à la crise par la création même de la Securité Exchanges Commission, v. Frison-Roche, M.-A., La Compliance: hier, aujourd'hui et demain, 2017 ; sur le fait qu'en Europe, la Compliance est apparue à travers les sanctions infligées à des banques européennes par les entreprises américaines, v. Frison-Roche, M.-A., Le Droit de la Compliance, 2016. La différence d'origine explique la différence de perception et le fait que l'attitude européenne soit pour l'instant principalement de type "défensif". 

17

On the continuum between these notions, Frison-Roche, M.-A. ed., Régulation, Supervision, Compliance, 2017. 

18

This leads the Compliance Law to become autonomous from the Law of Regulation, even though it originates from it: Frison-Roche, M.A., Le Droit de la Compliance au-delà du Droit de la Régulation (The Law of Compliance beyond the Law of Regulation), 2018.

19

Sur le droit des embargos, v. ....

20

Sur le Droit dit de la "finance verte", voir le rapport des experts de haut niveau, ...., décembre 2017. 

21

V. infra. 

22

V. infra. 

23

V. infra. 

24

Lesquels se mettent à fonctionner comme des organes de régulation recherchant la satisfaction d'un intérêt supérieur, s'éloignant d'un Droit des sociétés classique basé sur la propriété privée, Droit des sociétés qui s'efface de plus en plus (Frison-Roche, M.-A., .... Mélanges Schmidt) ; Sur l'opposition entre le Droit des marchés régulés et le Droit des sociétés, v. le cas pratique du retrait de la coté par décision pure et simple et non pas souci de l'intérêt du marché. 

25

Sur la place du juge en Droit de la Régulation, v. 

26

La qualification des autorités de régulation comme des organes juridictionnels lorsqu'ils appliquent des sanctions a été l'objet d'âpres discussions doctrinales et de cas de jurisprudence intenses. Les textes ont depuis entériné la solution, secteur après secteur, puis d'une façon générale. Sur cette question, voir d'une façon générale ....

27

Sur l'application du principe d'impartialité au Régulateur, et sur la figure juridictionnelle imposée au Régulateur, objet d'une très importante jurisprudence, puis législation, v. par ex. ....

28

In so far as the disappearance of frontiers and the intensity of trade produce an enormous mass of norms and legal decisions, notably contractual and jurisdictional, vast unordered accumulation, without common principles being shared. This very buzzing regulatory disorder is a desert of Law. For a more detailed demonstration, see for example Frison-Roche, M.-A. Globalization from the point of view of Law, 2017.

29

Supiot, A., Prendre la responsabilité au sérieux, 2015. 

30

S. supra; 

31

On the specific Ex Ante dimension of the Regulation Law, s.Frison-Roche, M.-A., Le couple Ex Ante - Ex Post, justificatif d'un droit spécifique et propre de la Régulation, 2006 (article written in French). 

32

Objet de la Loi dite "Sapin 2", loi qui a rendu très visible la notion de "Compliance" en Droit français. Sur cette loi du 9 décembre 2016, v. par exemple ....

33

On the very notion of "monumental goals", characteristic of a constituted and autonomous "Law of Compliance", v. Frison-Roche, M.-A., The Compliance Law, 2016.

34

Sur le caractère peu classique de cette concentration des pouvoirs, issu d'une conception "économique" des organisations et non pas "juridique", v. Frison-Roche, M.A., Le Droit est-il un atout ou un handicap pour nos entreprises et nos territoires, 2018. 

35

According to Farjat's demonstration, Réflexions sur les codes de conduite privés (article only  written in French) 1978. The demonstration was later developed by Gunther Teubner, the author claiming that firms now have the power to set standards Constitutional Norms: Teubner, G., constitutionnalisation des entreprises? Sur les rapports entres les conduite "privés" et "publics" des entreprises" (article only written in French) ", 2015. V. More generally, Teubner, G., Constitutional Fragments: Societal Constitutionalism in the Age of Globalization, 2014.

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