24 avril 2020


Compliance Law, Health crisis and Future

par Marie-Anne Frison-Roche

This interview was conducted in French with Olivia Dufour, for an article published in French in the digital publication Actualité Juridique.

Its subject is  the confrontation between the current health crisis situation and the Compliance Law. 


Summary. After defining Compliance Law, distinguishing the procedural and poor definition and the substantial and rich definition, the starting point is to admit the aporia: the type of health crisis caused by Covid-19 will be renewed and it is imperative to prevent it, even to manage it, then to organize the crisis exit. Public Authorities are legitimate to do so, but because this type of crisis being global and the State being consubstantially linked to borders, States are hardly powerful. Their traditional International Law shows their  limits in this current crisis and one cannot hope that this configulration will improve radically.

In contrast, some companies and markets, notably the financial markets, are global. But the markets are not legitimate to carry out such missions and counting on the generosity of certain large companies is far too fragile in front of the "monumental goal" that is the prevention of the next health crisis, crisis which must never happen.

How to get out of this aporia?

By Compliance Law, basis of, in a literal and strong sense, the "Law of the Future". 

We need to be inspired by the Banking and Financial Compliance Law. Designed in the United States after the 1929 crisis to tend towards the "monumental goal" of the absence of a new devastating crisis in the country and the world,  this set of new legal mechanisms gave duty and power of supervision, regulation and compliance to market authorities and central bankers. These are independent of governments but in constant contact with them. Today, they claim to have as first priority the fight against climate change. Now and for the future, they must also be given the responsibility and the powers to prevent a global health disaster, similar to a global ecological disaster, similar to a global financial disaster. This does not require a modification of the texts because their mandate consists in fighting instability. Stability must become a primary legal principle, of which the fight against monetary instability was only a first example. By the new use that central banks must make of it by preventing and managing health crises, Compliance Law will ensure that the future will be not catastrophic.


Actu-JuridiqueThe health crisis confronts us with new difficulties. In what way could Compliance Law prove its usefulness?

Marie-Anne Frison-Roche: Compliance Law is usefulness because we face an aporia. This crisis requires the intervention of public authorities. No one doubts it. But States have a consubstantial relationship with borders. There is no World State. This crisis is global. Certainly, certain companies and certain markets, notably financial ones, are on a global scale. But it is not their mission to prevent, manage or organize a crise way out. This is why we face an aporia, since the legitimate actor (State) does not have the size and the actors of adequate scale (company and market) have not this mission and must not obtain the power to do it. How to do ? Because there is an absolute urgency to find a mechanism to prevent the next health crisis, This is where Compliance Law appears particularly suited to the treatment of this contemporary and urgent issue.


Actu-Juridique : Perhaps, at this stage, we could define the Compliance Law, so often confusing….

MAFR : Indeed ! Maybe because of a confusion between a procedural conception of Compliance (poor conception) and a substantial conception of Compliance. In a simple procedural vision, Compliance is about following the rules. It is a proof mechanism, requiring some to constantly demonstrate that they comply with all applicable rules. This obligation of "procedural Compliance" is already a major development: it constitutes a reversal of the classic principle according to which it is up to the public authority considering that the person violates a rule to prove it. “Procedural Compliance” reverses this principle: the subject of law must show in Ex Ante and permanent it ""Compliance" with all rules. The banks were the first to be subjected to this procedural rule. The resulting legal regime is very restrictive: transparency, obligation of internal self-monitoring procedure, Ex Ante constitution of proof of action to comply with all rules, etc. The objective of this newly laid imperative of procedural Compliance is to make the system more effective, more efficient, the Law thus being better respected than in a classic system where the subject of law has no obligation to demonstrate that he acts in accordance with the rules, possibly waiting for prosecution authorities to demonstrate non-"conformity" with legal obligations. But this conception is only a procedural system, not containing substantial standards, a system which one could say an "empty" one. Conversely and by a radical distinction, in a substantial way, Compliance Law is built on a goal, and even a "monumental goal"!footnote-1791. It was born historically in the United States in the financial sector during the 1929 crisis in order to avoid the renewal of a financial crisis as serious as the one they had just gone through!footnote-1792. It therefore always involves setting a goal and then organizing the means to achieve it. Going back to the banks, the first substantial goal was to avoid a crisis, and then we added other monumental goals: the fight against money laundering, then the environment. Today, the fight against health disasters. The future is not in the procedural conception, but in the subtantial one. The substantial conception is almost the opposite of the procedural one, because the procedural Compliance is empty and very poor, technical, satisfied by A.I. and the substantial Compliance is full and rich, with a political nature.


Actu-Juridique: How does this translate into practice?

MAFR : A State or a Public Authority poses what I call a "monumental goal", for example fighting against child labor, or corruption ("negative" goals) or restoring ecological balance ("positive" goal!) !footnote-1794 . These goals of a political nature, which the State is not in a position to achieve, notably because of their global dimension, are imposed on certain companies, the "crucial operators"!footnote-1794: in other words the political actor Internalizes in companies the task of achieving this goal. It is therefore they which are responsible for ensuring that this objective of public interest - that they have not formulated - is achieved.For example by transmitting information, or by taking charge of interests. They thus resolve the aforementioned aporia, in particular because they can act globally where the state is limited by its borders. In the current crisis, Facebook, for example, has engaged in the fight against false information by referring its users to official information, by removing false content or by posting warnings. This company did so spontaneously, but it could have been forced to do so by a public authority which asked it to pursue this monumental goal of preserving the truth!footnote-1795. In this case, this firm has the technical capacity. If this political aim and demand converges with a spontaneous concern of the company, so much the better, but in Compliance Law the agreement of the company on the goal is not required. Yet the action of "crucial operators" is often a harbinger of Compliance Law. When LVMH redirected its perfume factories to make hydroalcoholic gel and its textile units to produce masks, it spontaneously demonstrated its quality as a "crucial operator".


Actu-Juridique : Compliance has been practiced in financial matters for almost a century. We can see the diagram, financial institutions are subject to strict rules and must answer to a regulator, but what about an epidemic?

MAFR : Take the news. In January 2020, the Bank for International Settlements published The Green Swan. Central banking and financial stability in the age of climate change, asserting that central banks, as responsible for stability, must now take charge of climate change because it is a new factor of instability. In April 2020, the Banque de France published an article suggesting on the basis of this book that the health crisis must be thought of in the same way as climate change. It seems very relevant to me. Indeed, the central concept is Stability. It is a new legal concept, a pillar with regard to which the prospect of a monetary disaster, a banking disaster, an ecological disaster, a health disaster are of the same nature: they generate a " catastrophic global instability ”. These are therefore prospects to be excluded. How to do it ? By Compliance Law. Indeed, it internalizes long-term preventive actions with the monumental goal that this devastating instability of the crisis does not happen, that stability remains.


Actu-Juridique : We would therefore entrust the central banks with the task of managing health crises! And why not just at WHO?

MAFR : WHO? If we manage to transform this international organization into an effective regulator capable of fixing prevention rules, ensuring that they are respected and managing this type of crisis, so much the better, but I don't see how. We see here, and every day, the limits of International Law in that it works on the will of States. And with so little enforcement…. Those states that do not want to obey or give useful information can do so. Without being sanctioned. How to effectively prevent the next crisis with such weak tools!footnote-1796? Conversely, central banks have coercive powers. They are specialized in crisis prevention, their management and, perhaps in the most delicate thing, the way out of crises. . They operate in global interlocking, which is more efficient than a global agency. Their collaborators are of high level, know each other. They are independent of governments, in particular thanks to this institutional network, while being in permanent interaction with States. They are already entrusted with the "monumental goal" of the fight against ecological instability ("green finance"). We could also, without going beyond their mandate, entrust them with the fight against health instability, threatened by the prospect of new crises. Entrust them with the power to collect information, which is strategic and currently deficient, as seen in the case of China. They would be in charge of implementing prevention systems and, in the event of a crisis, of identifying the "crucial operators": those which are in a position to have information and act, which have the necessary know-how. . Concerning health security, in particular hospitals, laboratories, health professionals, industries. Organize cooperation, if necessary order them to cooperate. It is not a question of inventing everything and writing on white paper but rather of taking up what is already mature in Banking and Financial Compliance Law. As well as in Regulatory Law, of which Compliance Law is an extension!footnote-1797. For example, when it comes to solving this coronavirus crisis, certain work tools - producing care equipment - can be described as essential facilities.


Actu-Juridique : It could simply be a matter of social responsibility or ethics, moreover it is maybe on this basis that LVMH acts when the group produces hydroalcoholic gel?

MAFR : It is true. But the security of the future and the resolution of crises cannot depend on these generous impulses. Compliance Law is beyond this because it is not a question of waiting for a company to agree to participate in the effort by believing that its ethics require it. So much the better if there is convergence between the general interest defined by Public Authorities (the company is not the Legislator) and the commitments of corporate social responsibility, but Compliance Law is deployed in the of constraint. Coercion but not sacrifice or charity. For example, as it has been practiced for decades in Regulatory Law, if it is imposed to a company to produce masks because this firm is in a position to do so (notion of "crucial operator"), it's necessary to set a price for it fairly. Pricing techniques for accessing essential facilities are good examples for calculation methods. If companies want to do it because their ethics dictates it, so much the better, but this dimension cannot be a condition.


Actu-Juridique : Finance may have 70 years of experience in crisis prevention, but that has not protect the world from experiencing major financial crises, especially in 1987, 2001, 2008…

MAFR : True, but the existence of a branch of Law does not depend in its existence on its 100% efficiency. For example, Criminal Law is not contradicted by the persistence of crimes. In addition, Compliance Law is a particularly ambitious Law!footnote-1798 since it sets itself the objective of preventing the occurrence of systemic crises - of which health crises are a part, and of protecting the weakest, it is not surprising that it does not always succeed.


Actu-Juridique : What to do to implement what you recommend?

MAFR : Firstly, be fully aware that this type of crisis will recur and that we must equip ourselves with the tools capable of preventing, managing, and getting out of it. Secondly, and to speak only about Law, it is necessary to better understand the relationships between Law and Crisis, which have been relatively little studied, perhaps because these relations are too political. Europe is well placed for this!footnote-1799. Indeed, we could find inspiration in the mechanisms of the European Banking Union, established in 2014, which is very effective in preventing and managing banking crises. The regulatory mechanisms put in place by Europe after the 2008 crisis are unique in the world. Moreover, Europe is currently managing the health crisis better than many: the European States have been able to agree on the financial question, the European Commission reports on its action to the European Parliament, accountability satisfying the democratic principle. Furthermore, the European Union has made a fundamental change in principle. Since the 1990s, it has operated on the principle of free competition; the Commission is replacing it by the principle of cooperation. Contrary to the neutrality of Competition Law, the President of the Commission stresses every day the primary need to produce or /and obtain medical devices. She insists on the primary concern of institutions: the "life" of everyone. And we sometimes hear that Europe is too technocratic…. So you have to take inspiration from all of these regulatory and compliance mechanisms. I think that it is necessary and possible, without the need to modify the treaties, to entrust to the central bankers the duty - and therefore the power -, as they already do for banking, finance and the environment, to prevent and manage systemic epidemics , in the name of the principle of stability that they have in general and have always been responsible for achieving.






Actu-JuridiqueThe health crisis confronts us with new difficulties. In what way could Compliance Law prove its usefulness?


pour plus de développements techniques sur la distinction, v. Frison-Roche, Le Droit de la Compliance, 2016. 


Sur l'histoire et les projections sur le futur, notamment en matière d'environnement, v. Frison-Roche, M.-A., Le Droit de la Compliance : avant, maintenant, après, 2017. 


Sur cette notion, Frison-Roche, M.-A., Proposition pour une notion : l' "opérateur crucial" 2006. 


Sur cette notion, Frison-Roche, M.-A., Proposition pour une notion : l' "opérateur crucial" 2006. 


Frison-Roche, M.-A., Facebook, le coronavirus et la Compliance, 2020. 


Sur le développement de ce constat, à propos du cas de l'Amazonie et son rattachement au Droit de la Compliance, v. Frison-Roche, Compliance et extraterritoriale : un couple naturel et efficace pour l'avenir de l'Europe, 2020.


Frison-Roche, M.-A. (dir.), Régulation, Supervision, Compliance2017.


Sur l'ambition et la "prétention" comme signe du Politique, au coeur du Droit de la Régulation et de la Compliance, lorsqu'il s'agit de mettre l'être humain au coeur de la Globalisation, v. Frison-Roche, M.-A., La mondialisation vue par le Droit, 2017. 


V. d'une façon plus générale Frison-Roche, M.-A., Pour une Europe de la Compliance, 2019. 

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