The article below is the second in a series regarding "What You Need to Know About U.S. Law." Attorneys from a variety of practice groups at Pierce Atwood will author similar articles in the coming months to educate our overseas colleagues on U.S. law. Please feel free to contact the authors directly if you wish to comment on this article or suggest topics for future installments in this series.
When our clients overseas are engaged in litigation in the United States, they’re sometimes exasperated by the extremely broad reach of U.S. “discovery” – that is, the collection of documents and testimony prior to trial. Generally, under the U.S. Federal Rules of Civil Procedure, applicable in federal court civil litigation, parties “may obtain discovery regarding any non-privileged matter that is relevant to any parties’ claim or defense – including the existence, description, nature, custody, condition, and location of any documents or other tangible things and the identity and location of persons who may know of discoverable matter.” Fed. R. Civ. P. 26(b). For those overseas not accustomed to such wide-ranging discovery, complying with the U.S. rules can seem intrusive and burdensome.
On the other hand, our clients overseas can also be pleasantly surprised to learn that if they’re engaged in proceedings outside the United States, they may be able to use the broad reach of U.S. discovery to their advantage, and obtain documents and testimony here for use in the proceedings there. A U.S. federal statute, 28 U.S.C. § 1782 (“section 1782”), specifically allows for discovery in aid of proceedings before foreign or international tribunals in appropriate circumstances. This short article is intended to briefly remind our friends overseas that this potentially valuable tool exists, and may be available to them.
Section 1782(a) provides, in part, that:
The district court of the district in which a person resides or is found may order him to give his testimony or statement or to produce a document or other thing for use in a proceeding in a foreign or international tribunal, including criminal investigations conducted before formal accusation. The order may be made pursuant to a letter rogatory issued, or request made, by a foreign or international tribunal or upon the application of any interested person and may direct that the testimony or statement be given, or the document or other thing be produced, before a person appointed by the court. By virtue of his appointment, the person appointed has power to administer any necessary oath and take the testimony or statement. The order may prescribe the practice and procedure, which may be in whole or part the practice and procedure of the foreign country or the international tribunal, for taking the testimony or statement or producing the document or other thing. To the extent that the order does not prescribe otherwise, the testimony or statement shall be taken, and the document or other thing produced, in accordance with the Federal Rules of Civil Procedure.
A person may not be compelled to give his testimony or statement or to produce a document or other thing in violation of any legally applicable privilege.
In 2004, the United States Supreme Court held that an applicant for discovery under section 1782 must demonstrate that: (1) the target of the discovery request “resides or is found” in the district covered by the U.S. District Court in which the section 1782 application is filed; (2) the purpose of the discovery is for use in a proceeding; (3) the proceeding is before a “foreign or international tribunal;” and (4) the application is made by the foreign or international tribunal or by an “interested person.” Intel Corp. v. Advanced Micro Devices, Inc., 542 U.S. 241 (2004) (hereafter, “Intel”).
U.S. District Courts consider the following four non-exclusive factors in deciding whether to exercise discretion to grant the application: (1) whether or not the person from whom discovery is sought is a party in the foreign proceeding or instead a nonparty (who may be in greater need of the court’s assistance); (2) the nature of the foreign tribunal, the character of the proceedings underway abroad, and whether the foreign tribunal will be receptive to U.S. federal court judicial assistance; (3) whether the request conceals an attempt to circumvent foreign proof-gathering restrictions or other important policies of the foreign country; and (4) whether the request is unduly intrusive or burdensome. Intel, 542 U.S. at 264-65; Norex Petroleum Ltd. v. Chubb Ins. Co. of Canada, 384 F.Supp.2d 45, 49 (D.D.C. 2005); In re IKB Deutsche Industriebank AG, 2010 WL 1526070 at *2 (N.D. Ill. 2010); In re Microsoft Corp., 428 F. Supp. 2d 188 (S.D.N.Y. 2006).
Though a district court’s order under section 1782 may set forth the “practice and procedure” to be employed in taking the testimony or producing the document or thing requested, if it does not, the discovery will be taken pursuant to the Federal Rules of Civil Procedure. In re Clerici, 481 F.3d 1324, 1335-36 (11th Cir. 2007). Fed. R. Civ. P. 26(b) authorizes the court to limit discovery if it determines that (a) the discovery sought is unreasonably cumulative or duplicative, or is obtainable from some other source that is more convenient, less burdensome, or less expensive; or (b) the burden or expense of the proposed discovery outweighs its likely benefit, taking into account the needs of the case, the amount in controversy, the parties’ resources, the importance of the issues at stake in the litigation, and the importance of the proposed discovery in resolving the issues. Fed. R. Civ. P. 45(c)(3)(A)(ii), concerning the use of subpoenas to compel deposition testimony and/or the production of documents from non-parties to domestic litigation, provides in part that on timely motion, the court for the federal district where compliance is required may quash or modify a subpoena under certain circumstances. Information may also be protected from discovery under U.S. law by virtue of the attorney-client privilege, see In re Application of Chevron Corp., 2010 WL 5437234 (D. Mass. 2010), the work product doctrine, see United Kingdom v. U.S., 238 F.3d 1312 (11th Cir. 2001), or other recognized mechanisms. Protection from discovery by privilege or protection may, however, be waived. See In re Chevron Corp., 633 F.3d 153 (3d Cir. 2011).
Significantly, there is no requirement that materials sought in the U.S. be discoverable in the foreign country where it is sought to be used for it to be discoverable here pursuant to section 1782. Intel, 542 U.S. at 247; In re Chevron Corp., 633 F.3d 153, 163 (3d Cir. 2011). Further, the foreign proceeding for which discovery is sought need not even yet be pending, as long as it is within “reasonable contemplation.” Intel, 542 U.S. at 258-59; Application of Consorcio Ecuatoriano de Telecomunicaciones S.A. v. JAS Forwarding (USA), Inc., 747 F.3d 1262, 1270 (11th Cir. 2014). Therefore, a person interested in a foreign proceeding which has not yet begun might be able to obtain discovery here which it could not obtain in the country where the proceeding will occur.
In addition, a section 1782 applicant is not required to seek documents or testimony in the foreign or international tribunal before requesting discovery in the U.S. Application of Malev Hungarian Airlines, 964 F.2d 97, 100 (2d Cir. 1992); Chevron Corp. v. Snaider, 78 F.Supp.3d 1327 (D. Colo. 2015); In re Servicio Pan Americano de Proteccion, 354 F.Supp.2d 269, 273-74 (S.D.N.Y. 2004).
An applicant seeking discovery from a corporation which has its place of incorporation or headquarters outside the district in which discovery is sought must establish that the corporation engages in “systematic and continuous local activities” within the district for the corporation to be “found” within the district under section 1782. In re Application of Inversiones y Gasolinera Petroleos Vanezuela, S. de R.L., 2011 WL 181311 (S.D. Fla. 2011).
Courts have also grappled with the types of bodies which qualify as “tribunals” under section 1782. InIntel, the Supreme Court held that the Commission on European Communities qualified as a section 1782 “tribunal.” Though the Court did not hold that all foreign private arbitration proceedings are necessarily within the scope of section 1782, it mentioned the body’s acting as a “first-instance decision maker” (suggesting the availability of judicial review of that decision) as a factor suggesting section 1782 “tribunal” status. Intel, 542 U.S. at 258.
Before the Supreme Court decided Intel in 2004, both the Second and the Fifth U.S. Circuit Courts of Appeal held that purely private arbitrations are not foreign or international tribunals under section 1782. Nat’l Broadcasting Co. v. Bear Stearns & Co., 165 F.3d 184 (2d Cir. 1999); Republic of Kazakhstan v. Biedermann Int’l, 168 F.3d 880 (5th Cir. 1999). Since Intel, however, a spilt of authority has developed as to whether a purely private foreign arbitration is a section 1782 tribunal. Intel itself did not focus on that specific question.
Some courts, relying on Intel’s citation to a law review article suggesting that the term “tribunal” includes “arbitral tribunals,” have found private arbitrations are “tribunals” under section 1782. See Ex Rel. ofWinning (HK) Shipping Co. Ltd., 2010 WL 1796579 at *8 (S.D. Fla. 2010) (“in Intel the Supreme Court primarily focused on the judicial reviewability of the decisions of the European Commission in determining that the body was a foreign or international tribunal under section 1782”); In re Application of Babcock Borsig AG, 583 F.Supp.2d 233 (D. Mass. 2008); Comision Ejecutiva Hidroelectrica del Rio Lempa v. Nejapa Power Co., LLC, 2008 WL 4809035 at *1 (D. Del. 2008); In re Hallmark Capital Corp., 534 F.Supp.2d 951, 952 (D. Minn. 2007); In re Roz Trading Ltd., 469 F.Supp.2d 1221 (N.D. Ga. 2006).
Other courts have, however, concluded that private arbitrations are not section 1782 tribunals. El Paso Corp. v. La Comision Ejecutiva Hidroelectrica Del Rio Lempa, 341 Fed.Appx. 31, 34 (5th Cir. 2009); In re Application of Grupo Unidos Por El Canal S.A., 2015 WL 1815251 at * 10 (N.D. Cal. 2015); In re Dubey,949 F.Supp.2d 990, 993–995 (C.D. Cal. 2013); In re Arbitration in London, England, 626 F.Supp.2d 882, 886 (N.D. Ill. 2009) (section 1782 applied to state-sponsored arbitral bodies that were subject to reviewability, and private arbitration was not included); In re Operadora DB Mex., S.A. de C.V., 2009 WL 2423138 at *12 (M.D. Fl. 2009) (ICC arbitration decision not judicially reviewable; ICC Court is itself a creature of contract and may not modify the substance of the arbitrators’ decision); La Comision Ejecutiva Hidroelecctrica Del Rio v. El Paso Corp., 617 F.Supp.2d 481, 485 (S.D. Tex.2008).
Courts have also construed section’s 1782’s phrase permitting application by any “interested person.” InRTI Ltd. v. Aldi Marine Ltd., 523 Fed. Appx. 750 (2d Cir. 2013), the Second Circuit held that a corporation would not be considered an “interested person” entitled to obtain section 1782 discovery in connection with foreign proceedings involving its corporate affiliates, unless it could demonstrate a showing that its corporate relationships created alignment of interest and purpose with the affiliates.
Interestingly, the United States District Court for the Southern District of New York has held that assistance under section 1782 can extend to the production of documents located abroad, noting that the statute requires only that the party from whom discovery is sought be “found” here, not that the documents themselves be found here. In re Application of Gemeinshcaftspraxis Dr. Med. Schottdorf, 2006 WL 3844464 at *5 (S.D.N.Y. 2006). The court noted that there is no such express restriction in the statute.