In re Application of The Islamic Republic of Pakistan for an Order Permitting Discovery Pursuant to Section 28 U.S.C. § 1782, Misc. Action No. 18-103 (D.D.C. Apr. 10, 2019) [click for opinion]
Pakistan experienced a major energy crisis between 2006 and 2007. In response, it initiated a policy of power generation through a "Rental Power Projects Program." Karkey Karadeniz Elektrik Uretim A.S. ("Karkey") builds and operates "Powerships"—ships with mounted power generation equipment that can be sailed around the world and connected to the electric grid of countries in need of power. Like other power providers, Karkey bid for and was awarded a contract to set up ship-mounted power generation units near Karachi, Pakistan.
Following a complaint by a member of Parliament about the Rental Power Projects Program, the Supreme Court of Pakistan opened a case into government corruption. On March 30, 2012, it issued a judgment that held that all contracts under the Rental Power Projects Program violated Pakistani Procurement Rules because government functionaries and project contractors had been "prima facie involved in corruption"; the Supreme Court of Pakistan declared that all such contracts were void ab initio. The Supreme Court also ordered Pakistan's National Accountability Bureau (the "NAB") to investigate possible corruption by Pakistani officials and all contractors, including Karkey.
In January 2013, Karkey initiated an arbitration with the International Centre for Settlement of Investment Disputes ("ICSID"). During discovery, Karkey notified Pakistan that 70 backup tapes containing electronic files prior to April 2010 existed. Believing these tapes to have crucial evidence for the proceeding, Pakistan submitted three requests to the Tribunal to obtain the tapes from Karkey. The Tribunal rejected all three requests because recovering 70 backup tapes would be excessively burdensome in the absence of any evidence that these tapes contained any vital information.
The Tribunal awarded judgment to Karkey in August 2017. Shortly thereafter, Pakistan filed an Application for an Order Permitting Discovery in the district court, seeking to compel Arnold & Porter Kaye Scholer LLP ("Arnold & Porter") to (1) produce the 70 backup tapes belonging to the firm's client Karkey; and (2) answer interrogatories regarding the location and handling of those tapes. Pakistan argued that 28 U.S.C. § 1782 mandated disclosure because the tapes contained evidence relevant to the ICSID proceeding and the proceeding by Pakistan's NAB.
The court explained that, in addressing a discovery application under section 1782, it considers first whether it has the authority to grant the request and then whether it should exercise its discretion to do so. When determining its authority to grant a discovery request under 1782, a court considers "(1) whether the person from whom discovery is sought resides or is found in the district where the action has been filed; (2) whether the discovery sought is for use in a proceeding before a foreign or international tribunal; and (3) whether the application is made by a foreign or international tribunal or 'any interested person.'"
If the court determines it has authority to grant the request, it must then determine whether it should exercise that authority. The Supreme Court has discussed "factors that bear consideration in ruling on a §1782(a) request." Those include: (1) whether the person from whom discovery is sought is a participant in the foreign proceeding; (2) the nature of the foreign tribunal and the character of the proceedings; (3) whether the application conceals an attempt to circumvent foreign proof-gathering restrictions or other policies; and (4) whether the discovery sought is unduly intrusive or burdensome.
The court considered its authority and discretion to order discovery in aid of the ICSID and NAB proceedings separately. With respect to the ICSID proceedings, Arnold & Porter argued that the ICSID Tribunal does not qualify as a "foreign or international tribunal" because it is a "private" or "supra-national" tribunal that Congress did not intend to include under § 1782. Specifically, Arnold & Porter cited to decisions in the Second and Fifth Circuits rejecting the use of § 1782 in support of private commercial arbitrations. The court distinguished these decisions and rejected this argument. Unlike arbitrations before the ICC, arbitrations pursuant to Bilateral Investment Treaties are not merely private arrangements; they are sanctioned by their governments and governments participate in them, as was the case here.
Second, Arnold & Porter argued that even if § 1782 applied, the court should exercise its discretion under § 1782 and refrain from granting relief. In analyzing the tapes, the court found that (1) because Arnold & Porter's client was a party to the ICSID proceedings, the first factor weighed against discovery; (2) because ICSID rules allowed the introduction of new evidence in annulment proceedings, the second factor weighed in favor of discovery; (3) because the Tribunal denied the request for discovery three times, the third factor weighed against discovery; and (4) because Arnold & Porter had declared, and Pakistan did not rebut, that it was not in possession of the desired tapes, the fourth factor weighed against discovery. For these reasons, the court found that it would not order production of the backup tapes in aid of the ICSID proceedings.
With respect to the NAB proceedings, Arnold & Porter agreed in the abstract that NAB would constitute a foreign tribunal, but argued that this particular investigation was being conducted in bad faith with no legitimate basis. The court stated that it would consider this argument in connection with the other discretionary factors. Here, again, the court found that (1) the NAB had jurisdiction over Karkey, so the first factor weighed against discovery; (2) although a court may refuse to grant assistance in aid of unfair proceedings, it was not clear that this was the case, such that the second factor weighed "somewhat" in favor of discovery; (3) because neither party provided evidence about the NAB's proof-gathering policies, the third factor weighed in favor of discovery; and (4) again, because Arnold & Porter neither possessed nor controlled the backup tapes, the fourth factor weighed against discovery.
The court thus would not order production of the backup tapes in aid of the NAB proceedings. The court reached a different conclusion with respect to Pakistan's interrogatories, which asked a number of basic questions to the effect of "who has the tapes?" and "when did they have access to the tapes?" and "how are the tapes stored?" The court explained that, even without possession or control of the backup tapes, Arnold & Porter may nonetheless be able to answer these interrogatories, which do not require burdensome document recovery, review, and production. The court therefore ordered Arnold & Porter to answer the interrogatories propounded by Pakistan.
Graham Cronogue and William Shields of the Washington DC office contributed to this summary.