Court Ruling Exposes Legal Loophole in Corporate Crime Enforcement

A landmark UK court decision has clarified that Deferred Prosecution Agreements (DPAs) — key tools for holding corporations accountable for financial crimes — remain enforceable beyond their stated expiry dates when companies fail to meet financial obligations. The ruling in Guralp Systems Limited v Director of the Serious Fraud Office has significant implications for corporate criminal enforcement, preventing companies from simply waiting out deadlines to escape payment requirements for illicit profits.

The January 2026 judgment addresses a fundamental question in corporate law enforcement: Can authorities take action against companies that fail to pay agreed sums by DPA deadlines? The High Court's affirmative answer provides crucial clarity on the scope and enforceability of these statutory instruments, which have become increasingly important in UK efforts to combat corporate corruption.

Background and Context

Deferred Prosecution Agreements were introduced through the Crime and Courts Act 2013 as a middle ground between full prosecution and complete immunity for corporate offenses. These agreements allow designated prosecutors to suspend criminal proceedings against companies that admit wrongdoing, provided they meet specific conditions including financial penalties, cooperation with authorities, and implementation of compliance improvements.

The case centers on Guralp Systems Limited (GSL), which entered into a DPA with the Serious Fraud Office (SFO) on October 22, 2019, after admitting to conspiracy to make corrupt payments and failure to prevent bribery. The agreement, approved by the late William Davis J, required GSL to pay £2,069,861 in unlawful profits within five years. When the company made no payment by the October 2024 deadline, the SFO sought to enforce the agreement, leading to GSL's jurisdictional challenge.

Key Figures and Entities

Guralp Systems Limited, a technology company specializing in seismic monitoring equipment, faced allegations of corrupt practices spanning multiple jurisdictions. The company admitted to conspiracy in making improper payments and failing to prevent bribery, violations that potentially undermined integrity in international procurement processes.

The Serious Fraud Office, the UK's primary authority for investigating and prosecuting serious or complex fraud, bribery, and corruption, has increasingly utilized DPAs as an enforcement tool since their introduction. In this case, the SFO argued that allowing companies to escape financial obligations through technical time limitations would undermine the entire purpose of these agreements.

The Divisional Court, consisting of Lord Justice Edis and Mr Justice Calver, delivered the January 13, 2026 ruling that has now established important precedent regarding DPA enforcement. Their interpretation emphasized that these agreements serve public interests rather than functioning as conventional commercial contracts.

Legal and Financial Mechanisms

The legal question hinged on the interpretation of Paragraph 4 of GSL's DPA, which stated the agreement would be effective "ending on or before 22 October 2024, when the financial terms set out in Paragraphs 13-14 below have been fully satisfied." The company argued that this language created an absolute deadline regardless of compliance.

However, the court applied established principles of contractual interpretation from Arnold v Britton [2015] AC 1619, examining what "a reasonable person having all the background knowledge which would have been available to the parties would have understood them to be using the language in the contract to mean." This contextual approach revealed that other provisions, including Paragraphs 25 and 26 establishing a 30-day notice procedure before enforcement, would be rendered meaningless if the agreement automatically expired at the deadline regardless of payment status.

The judges noted that William Davis J, when approving the original DPA in 2019, had explicitly recognized that failure to meet terms might result in prosecution. This contextual understanding, combined with the statutory framework of Schedule 17 to the Crime and Courts Act 2013, led the court to conclude that expiry dates in DPAs are conditional upon compliance rather than absolute temporal limitations.

International Implications and Policy Response

This ruling has significant implications beyond the UK, as jurisdictions worldwide grapple with effective corporate crime enforcement mechanisms. The decision reinforces that alternative enforcement tools like DPAs cannot be undermined through technical legal interpretations that would allow non-compliant companies to escape accountability.

The case highlights the delicate balance between providing companies with pathways to remediation while ensuring enforcement tools retain teeth. International anti-corruption organizations have noted that clarity around enforcement timelines is crucial for maintaining the deterrent effect of such agreements across borders.

The judgment leaves unanswered the question of how long the enforcement window might remain open after the specified expiry date if authorities take no action. While the court affirmed the SFO's 30-day application period was "certainly made within a reasonable time," it declined to establish specific temporal boundaries, leaving this issue for future cases to resolve.

Sources

This report draws on the Divisional Court judgment in Guralp Systems Limited v Director of the Serious Fraud Office [2026] EWHC 37 (Admin), provisions of the Crime and Courts Act 2013, and principles established in Arnold v Britton [2015] AC 1619. The analysis also incorporates information about the original DPA approval process conducted by the late William Davis J in 2019.