Two very recent federal appellate decisions have substantially expanded the ability of foreign litigants to obtain evidence in the United States under 28 USC §1782(a) for use in their proceedings abroad. In Re Application of Del Valle Ruiz 2019 WL 4924395 (2d Cir. Oct. 7, 2019); In re Application to Take Discovery, 2019 WL 4509287 (6th Cir. Sept. 19, 2019).
By way of summary, taken together, these two cases extend and broaden already existing law by making clear that once a U.S. Court has personal jurisdiction over a party from whom evidence is sought, the evidence can be obtained for use in foreign court or private arbitrations and a U.S.-based defendant can be compelled to produce materials it has in its possession whether those materials are physically inside or outside the United States.
The federal statute at issue provides that the federal district court in the district where the defendant (person or entity from whom evidence is sought) resides or is found, on the application of an “interested person” (typically a litigant abroad) or upon request by a foreign or international tribunal, can exercise its discretion to order the defendant to give testimony or a statement, and to produce documents and other things for use in a proceeding before a “foreign or international tribunal.”
However, any evidence obtained in the United States will ultimately have to be put in a form which is acceptable to the foreign tribunal.
In order to act on an application for such evidence the court must have personal jurisdiction over the defendant.
Once personal jurisdiction has been established, the U.S. Supreme Court in Intel Systems v. Advanced Micro Devices 542 U.S. 241 (2003) has set out the factors governing the lower court’s exercise of its discretion. These are:
(a) Whether the defendant is a party to the foreign proceedings, and if so is there a need to invoke the American court’s assistance; and
(b) The nature of the foreign tribunal, the character of the proceedings, and the receptiveness of the foreign government, court, or agency to assistance from the U. S. judiciary; and
(c) Is the application an attempt to circumvent the foreign tribunal’s restrictions on evidence gathering; and
(d) Is the request intrusive or abusive.
If the request is granted, the court can limit the scope of the response and prescribe the method of responding. Absent any such direction in the court’s order, the response proceeds in accordance with the Federal Rules of Civil or Criminal Procedure (as the case may be) which govern all activity in the federal district courts.
Del Valle Ruiz also held that the court can compel the defendant to produce materials held outside the U.S. if the defendant has the requested material under its control – a potentially potent tool to be used where defendants have relevant material in jurisdictions that are inhospitable to such evidentiary demands.
Importantly, the Sixth Circuit held that private arbitral tribunals fall within the ambit of the statute’s definition of “foreign or international tribunal.” While the Second and Fifth Circuits have previously excluded privately constituted arbitral panels from the foregoing definitions, these decisions predate the Supreme Court’s decision in Intel which suggested that such panels should indeed be included within the statutory definition. Thus, these latter two circuits await an appropriate case for reconsideration of the issue.