FEB launches a Business Compliance Chair with ULiège and UGent

For the first time in Belgium, a chair is studying "Business Compliance", i.e. the issue of monitoring compliance with regulations in the business world.  While the subject used to be reserved for specific sectors, such as banking, insurance and legal fields, it now concerns most companies. However, the compliance frameworks are still sometimes unclear, and companies do not always appreciate the importance of business compliance and the issues at stake. This increases the risks, particularly legal risks, which companies are faced with.

Business Compliance raises many legal questions, and the FEB (Federation of Belgian Enterprises) wanted to dedicate a specific Chair to this field.  This Chair, inaugurated at the FEB headquarters in Brussels on 15 March 2023, is entrusted to Professors Hans De Wulf, from UGent, and Roman Aydogdu, from ULiège.

Launch of the Business Compliance Chair

In this interview, Prof. Roman Aydogdu (Business Law) explains in more detail what Business Compliance is, what is at stake and why it is important to develop research on this subject.

What does the notion of "Business Compliance" mean for a company? Who defines its contents and what types of sanctions are possible for a company?

My working hypothesis is that compliance, taken in itself, constitutes a form of "regulation", of conduct of economic agents, distinct from and competing with state law, from "regulation". Compliance must therefore be given a definition that sheds light on its similarities and differences with state law. Such a definition can open the way to an analysis of the relationship between the two phenomena, which leads, in the best of cases, to a form of cooperation, of complementarity: in a word, to a "co-regulation" of behaviour.

Business Compliance is an organisational device for the company, or more precisely: a function, internal to the company, for managing the risk linked to non-compliance with standards which could lead third parties to sanction the company. This definition makes it possible to encompass all the known manifestations of compliance, without being linked or limited to these manifestations. This is because compliance is concerned with the failure to comply with all standards, whoever the perpetrator and whatever their status, which could lead any third party, whoever their identity and power, to apply any sanctions to the company, whatever their nature.

While it is obviously not possible for the compliance function to deal with (and even know about) all the standards applicable to a company, the only relevant criterion for determining the compliance perimeter of a company is the probability and intensity of the risks incurred for non-compliance with standards, which necessarily varies from one sector to another and from one company to another. From one end of the spectrum to the other, compliance therefore focuses on the risk of a state prison sentence for a criminal offence, as well as the risk of a trade boycott by an NGO due to the violation of a soft law norm of international law, It can also involve an administrative measure by a regulatory authority for failure to comply with one of its delegated regulations or an action for damages by local communities in a southern country for the violation by a subcontractor of a Dutch multinational of a code of ethics which the latter has voluntarily declared it will enforce throughout its subcontracting chain.

Compliance, as an organisational device of the company, shows its most salient characteristics in some of its activities: the drafting of policies, codes of conduct, guides and procedures, on the one hand, and the setting up of monitoring, denunciation, investigation and sanction mechanisms, on the other hand, testify to the existence of a normative order within the company, which has striking similarities with the state legal order. This order is based on the leverage of the company, whether it be disciplinary power over its employees or market power over its suppliers or customers. For some legal theorists, such a normative order, based on a power of its own, deserves to be called a non-state legal order. This theoretical debate reveals, at the very least, the close relationship between compliance and the classical legal phenomenon.

Why is it more topical today? What is at stake?

Regulation - of which compliance is thus, along with state law, one of the various modes - is not, in my view, limited to the 'regulated sectors' alone - whether it be bancassurance or the sectors that have undergone the wave of privatisation, liberalisation and deregulation of the 1980s and 1990s. It is not that compliance has no links with these regulated sectors, quite the contrary: it finds a home there and perhaps, historically, its first manifestations. In the United States of America, for example, compliance has two origins: in the control of regulated sectors, but also in federal criminal policy and the use it makes of compliance programmes for all companies. This is not to mention the extreme fortune that compliance has had in the development of the concept of due diligence, or duty of care, at the heart of corporate social responsibility, in a globalised context where states, because of their territorial limits, are out of date.

The "co-regulation" at work in Business Compliance is therefore the result of various factors (the State's desire to ensure greater effectiveness of its law by relying, in part, on companies' own resources; companies' concern, faced with an ever denser and more complex normative environment, to manage this risk effectively) but the challenge is always the same: to establish a balance, optimal from an economic point of view and fair from a political and moral point of view, between the State and companies in order to meet the challenges of the future, in terms of financial stability, the fight against global warming, social justice and the development of the countries of the South, the protection of privacy in the face of Big Data, etc.

What is the aim of the Business Compliance Chair created by UGent and ULiège with the FEB?

Over the last thirty years, Business Compliance has become an increasingly important dimension of regulatory practice in Belgian business life. However, to date, it still lacks a clear theoretical framework, which, on the one hand, grasps its constituent elements and, on the other hand, allows us to think about its articulation with state law. The aim of this Chair is to provide such a framework, making Einstein's words our own: "Nothing is more practical than a good theory". Special emphasis will be placed on compliance outside of bancassurfinance, with the new perspectives that are opening up, through corporate social responsibility, in terms of the protection of human rights, social rights and the environment.

Is this a first in Belgium, and in Europe?

The Business Compliance Chair is the third chair awarded by the FEB, but the first in legal matters. It is the first substantial research effort in the field of compliance, which has not been studied much in Belgium from a legal point of view until now. The situation is the same in Europe, where the subject, although fundamental and extremely developed in practice, frightens researchers. There are two main reasons for this situation, which the Chair is trying to remedy: on the one hand, the subject, precisely because it is new, global, dense and protean, is elusive if it is not approached with a reading grid that makes it possible to order reality - this is the whole purpose of building a clear theoretical framework - ; on the other hand, compliance is another way of doing law, which mobilises not only an unusual epistemological, 'meta-legal' approach, but also an interdisciplinary collaboration, open especially to management sciences - hence the dual choice, which is not at all paradoxical, of opening up to both legal theorists and practitioners, whether lawyers or not, of compliance.

What support does the Chair have and how will it be organised in practice?

The Chair has received strong support from the FEB, which is funding it for four years, and from the two universities involved, ULiège and UGent, which have agreed to have two of their professors devote a substantial part of their academic activities to it during this period. We can also count on the enthusiasm of the practitioners, through the creation of a Steering Committee composed of compliance specialists, as well as on a network of researchers who are highly mobilised at the European and international level, as shown by the presence of Professor Marie-Anne Frison-Roche, from Sciences Po Paris, at the Chair's launch session.

In addition to the research to be carried out by my colleague from Ghent and myself, the Chair aims to enable the realisation of a joint ULiège-UGent PhD in legal sciences, as well as the organisation of several scientific events at national and international level.

To which audiences is the Chair more specifically addressed?

I would answer, jokingly: to all women and men of good will - Business Compliance needs it. More seriously, the objectives of the Chair naturally open up a double audience: on the one hand, scientists, in a broad spectrum, from legal theory to management sciences; on the other hand, practitioners, in an equally broad spectrum, from compliance officers in companies to public authorities, regulatory authorities, NGOs anxious to seize all the levers to advance their causes, and, more generally, all citizens sensitive to compliance-related issues.

Contact

PROF. ROMAN AYDOGDU