A company that failed to pay a £2 million penalty imposed under a deferred prosecution agreement (DPA) is contesting the Serious Fraud Office's (SFO) authority to enforce the deal, according to a report in The Law Gazette.

The dispute centres on whether the SFO possesses the statutory tools to compel compliance with the financial and remedial terms of a DPA once a company defaults.

The company argues that the agency's enforcement powers under Schedule 17 of the Crime and Courts Act 2013 — the statute that introduced DPAs in England and Wales — do not reach direct enforcement of payment obligations.

What is a deferred prosecution agreement?

A DPA is a negotiated settlement between a prosecutor and a corporate defendant that allows a company to avoid immediate criminal prosecution in exchange for paying a financial penalty, cooperating with investigators, and implementing compliance reforms. The agreement requires approval from a Crown Court judge before taking effect.

Seven DPAs have concluded in England and Wales to date, covering companies including Tesco Stores, Standard Bank, Rolls-Royce, Serco Geografix, G4S Care and Justice Services, and Airbus.

How does breach enforcement ordinarily work?

If a company fails to meet the terms of its DPA, Schedule 17 permits the prosecutor to file a breach statement with the Crown Court. The court may then declare the company to be in breach and may invite the prosecutor to terminate the DPA and resume criminal proceedings.

The statute does not, on its face, give the SFO an independent civil right to recover unpaid sums through enforcement officers or by way of charging order. Companies in default have generally cooperated voluntarily because the alternative is the revival of a criminal case.

Why does this challenge matter?

If the company succeeds in arguing that the SFO cannot enforce the DPA directly, prosecutors may need to rely solely on the threat of resumed criminal proceedings to compel performance.

That outcome would reshape how future DPAs are drafted, particularly on the recovery of financial penalties and remediation costs.

It would also expose an unenacted statutory gap: Parliament provided for breach declarations and resumed prosecutions, but not for the routine civil collection of unpaid penalties after a company defaults.

What are the practical consequences for practitioners?

A ruling against the SFO would complicate negotiations over future DPAs by reducing the agency's practical leverage once a deal is signed. Defence advisers may push for tighter drafting of payment milestones and breach triggers. Prosecutors may seek to widen the express terms of any future agreement to include explicit consent to enforcement, or may return to traditional civil recovery routes to collect unpaid sums.

A ruling for the SFO would, by contrast, confirm prosecutors' ability to compel performance without re-opening the criminal case.

What happens next?

The Law Gazette report does not name the company bringing the challenge, identify the court hearing the application, or give a hearing date. The case is expected to test one of the less-examined corners of the UK's corporate resolution regime and may proceed to a contested ruling in the Crown Court before any appeal mechanism is engaged.