In the case of Mare Shipping, Inc. v. Squire Sanders (US) LLP, 574 Fed.Appx. 6 (2014), the Second Circuit stated that a U.S. law firm representing Spain in a lawsuit in the Southern District of New York was not immune from a discovery request brought under 28 U.S.C. § 1782. Whereas, in In re Aluminum Warehousing Antitrust Litig., 2014 WL 5801607, (S.D.N.Y. Nov. 7, 2014), a Southern District Judge determined that a privately owned "non governmental corporate party" was protected by the Foreign Sovereign Immunities Act (FSIA), 28 U.S.C. §§ 1130, 1602 et seq., from discovery.
United States Statute 28 U.S.C. § 1782 allows an actual, or potential, party in a foreign litigation to bring a motion in U.S. Federal Court to compel discovery for use in the foreign action. The U.S. Supreme Court has set forth several factors that a court should consider in exercising its discretion to allow the requested discovery. These considerations are: (1) whether "the person from whom discovery is sought is [not] a participant in the foreign proceeding," which militates in favor of granting the request; (2) "the nature of the foreign tribunal, the character of the proceedings underway abroad, and the receptivity of the foreign government or the court or agency abroad to U.S. federalcourt judicial assistance;" (3) "whether the § 1782(a) request conceals an attempt to circumvent foreign proof gathering restrictions or other policies of a foreign country or the United States;" and (4) whether the request is "unduly intrusive or burdensome." Intel Corp. v. Advanced MicroDevices, Inc., 542 U.S. 241, 26465, 124 S.Ct. 2466, 159 L.Ed.2d 355 (2004).
In Mare Shipping, the owner and the captain of a tanker involved in a casualty off the coast of Spain sought discovery from a US law firm that acted on behalf of Spain. In particular, the owner and captain of the tanker wanted evidence relating to certain Declarations submitted on behalf of Spain in a legal action in the US and to use this evidence in separate legal actions in Spain relating to the same casualty. While the underlying motion to compel discovery was ultimately denied based on a review of the Intel Corp. considerations, the Second Circuit agreed with the District Court holding that the FSIA itself did not prevent discovery. Relying on the U.S. Supreme Court decision in Republic of Argentina v. NML Capital, Ltd., 134 S.Ct. 2250 (2014), the Second Circuit confirmed that FSIA only grants sovereign immunity to a foreign sovereign, or its "agency or instrumentality," which is "an organ of a foreign state or political subdivision thereof, or a majority of whose shares or other ownership interest is owned by a foreign state or political subdivision thereof," not a hired law firm. 28 U.S.C. § 1603(b)(2). As the Second Circuit acknowledged that certain circumstances could change in time and allow discovery under Intel Corp., the law firm for Spain was ordered to preserve the sought after materials for a period of five years.
Only a few months later, in In re Aluminum Warehousing Antitrust Litig., 2014 WL 5801607, (S.D.N.Y. Nov. 7, 2014), another Southern District Judge held, among other things, that the London Metal Exchange Limited (LME) was immune to limited discovery pursuant to the FSIA. Even though the LME is a "nongovernmental corporate party" privately owned by a Hong Kong listed corporation, the U.K. judiciary considers the LME as an organ of the U.K. Government benefiting from immunity when the LME is fulfilling its regulatory functions. As no exception to the FSIA applied under the circumstances, the District Court dismissed the LME from the action and, inter alia, denied the requested discovery.
In short, in New York, information held by a law firm hired directly by a foreign sovereign is only protected by common law privileges. But, a privatelyowned company recognized by a foreign sovereign as a regulatory body can enjoy the full protection of the FSIA. The distinction may be subtle, and maybe even contradictory, at first blush, yet it is there nevertheless.