France: The impact of contributory negligence on criminal liability following Kerviel

Last April, we reported on the Cour de cassation’s decision in the Kerviel case , in which the supreme court ruled that the civil fine imposed on the rogue trader had to be apportioned in view of the bank’s contributory negligence to the fraud. This ruling represented a departure from long-established case law, which up until then had always held that in matters of offences against property, the author of the offence must be ordered to compensate the victim for the entire harm suffered, regardless of the victim’s negligence.

The extent of this new principle remained uncertain. Indeed, there were concerns that the specific circumstances of the case had played an important part in the endorsement of a proportional liability regime, in particular the fact that the defendant had not derived any profit from the offence he had committed, an aspect upon which the Court had insisted.

Those concerns have, however, proved to be unfounded. The Cour de cassation has now twice confirmed the general nature of its March 2014 ruling. By doing so, the Court has allowed a clearer picture of the new proportional liability regime to emerge, giving an insight into its potential impact on future cases.

The first confirmation came in a judgment of the Cour de cassation’s Criminal Chamber, handed down on 25 June 2014 . In that case, two individuals had been found guilty of fraud and breach of trust for selling or leasing cars which they did not own themselves, offences from which they had indisputably derived a profit. The Court of Appeal had ordered the two defendants to jointly pay damages equal to the entire harm suffered by the cars’ legitimate owners. The supreme court overturned the ruling and held, in the same terms as in the Kerviel case, that “where several wrongdoings have contributed to the occurrence of the harm, their authors’ liability will be incurred in a measure to be determined by the trial court”. although the Cour de cassation did not decide this point, the case being sent back to another Court of Appeal for a decision on the merits, it was at least arguable from the facts that the legitimate car owners could be considered to have been negligent in enabling the criminals to lease or sell their cars or even tacitly to have agreed to it.

In a second case dated 23 September 2014 , the same Criminal Chamber gave a further indication of the broad reach of its new case law. Although it confirmed the Court of Appeal’s decision that there had been no contributory negligence on the victim’s part in this case, it held that the lower court had erred in stating that the intentional nature of the offence excluded by definition any recklessness on the part of the victim.

It is therefore clear that negligence or wrongdoing by the victim of an offence against property (e.g. theft, breach of trust, interference with automated data processing systems) will reduce the amount of damages awarded to that victim.

Companies will have to be particularly cautious following this new line of case law, as wrongdoing, negligence or recklessness on the part of their managers, employees or agents could adversely impact the amount compensation they may receive as victims of offences against property.