SERVICE OF PROCESS AND THE TAKING OF EVIDENCE ABROAD : THE IMPACT OF ELECTRONIC MEANS ON THE OPERATION OF THE HAGUE CONVENTIONS

Transcription

1 SERVICE OF PROCESS AND THE TAKING OF EVIDENCE ABROAD : THE IMPACT OF ELECTRONIC MEANS ON THE OPERATION OF THE HAGUE CONVENTIONS 2 nd November 2015 What s coming next? Critical Challenges Facing the Evidence Convention Noëlle LENOIR Partner

2 A MISSED OPPORTUNITY

3 1. THE LEGITIMATE AIMS OF THE EVIDENCE CONVENTION Its purposes are still fully legitimate To facilitate the gathering and transfer of documents and other information located in Foreign States that are signatories to the Convention, with a view to improving mutual judicial cooperation. To avoid conflict of laws of procedure between Common law countries, especially the US, and Civil law countries and thus reconcile the differing legal philosophies of the Civil law, Common law and other systems and permit effective transnational evidence-taking while satisfying doctrines of judicial sovereignty (see, documents of the 11 th session of the Hague Conference, 1970).

4 2. WHY HAS IT BEEN RELATIVELY INEFFECTIVE? The conflict of laws of procedure could not but occur for two main reasons Article 23 of the Convention : Contracting States may refuse to execute Letters of Request issued for the purpose of obtaining pre-trial discovery of documents (US stylediscovery) US Supreme Court Aérospatiale decision : The Evidence Convention represents neither an exclusive, nor a mandatory means of obtaining evidence from abroad. - It does not modify the law of any contracting State or compel any contracting State to change its own-evidence gathering procedures. - Nonetheless, trial courts may conduct a particular analysis guided by the concept of international comity when considering to make a request through the Convention based on diverse factors including (i) US sovereign interests; (ii) the foreign State s sovereign interests; (iii) the likelihood that recourse to the Convention s procedures would be effective

5 3. RESERVATIONS ON ARTICLE 23 OF THE CONVENTION The contracting parties reservations on Article 23 of the Convention illustrate the differences between the US and the EU approach UK: The UK will not execute Letters of Request issued for the purpose of obtaining pretrial discovery of documents defined as including any Letter of Request which requires a person: a. to state what documents relevant to the proceedings to which the Letter of Request relates are, or have been, in his possession, custody or power ; or b. to produce any documents other than particular documents specified in the Letter of Request as being documents appearing to the requested court to be, or to be likely to be in his possession, custody or control. France: Letters of Request issued for the purpose of obtaining pre-trial discovery of documents does not apply when the requested documents are enumerated limitatively and have a direct and specific link with the subject of the procedure.

6 LETTERS OF REQUEST/ ROGATORY VS. DISCOVERY

7 4. LETTERS OF REQUEST v. US FISHING EXPEDITIONS Even though in principle fishing expeditions are prohibited under US Federal Rules, in practice such limitation is not respected In the EU: the judge, not the parties, enforces the scope of discovery. In addition, the parties can only obtain material that is admissible at trial so that the requested documents are to be identified with a reasonable degree of specificity; Even in the UK: the court may order disclosure from a non-party only when the requested information is seen as supporting the case of the applicant; In the US: the limitation of discovery is regulated by the parties themselves, and the judge only handles discovery disputes in the event of unresolvable conflicts.

8 5. PRE-TRIAL DISCOVERY UNDER FRENCH LAW Article 145 of the French Code of Civil Procedure provides for a pre-trial discovery phase controlled by the trial court judge Only the judge can prescribe in futurum measures compelling a party to produce evidence under the condition that the plaintiff has a legitimate interest in obtaining the document or information; General investigation measures are duly prohibited and usually deemed a disproportionate infringement to the rights of the natural and legal persons having to undergo such an investigation measure (see, the decision of the Cour de cassation, 14 November 2013, by which it confirmed the nullity of the procedure regarding a set of documents, electronic data and computer hardware because it exceeded what is authorized by Article 145 CCP); The plaintiff must establish before the court that the requested elements are fundamental to the outcome of the litigation and that pre-trial discovery is necessary to preserve the integrity of the evidence requested.

9 6. TREATMENT OF DISCOVERY IN THE EU EU Regulation 1206/2001 clearly illustrates the fact that, in the EU, US-style discovery is not a method for gathering evidence (in civil and commercial matters) Each Member State is obliged to appoint a Central Authority for supplying information to the requested courts which receive subpoenas from courts from other Member States. When a court requests to take evidence directly in another Member State, it submits a request to the Central Authority or other entities designated for that purpose; (Article 17); The request is executed by the requested court, which can use coercive measures, in accordance with the law of its Member State. In addition, the requesting court may ask the requested court to use communications technology at the performance of the taking of evidence, in particular by using videoconference and teleconference (Article 10.4); Regulation 1206/2001 prevails over the Evidence Convention (Article 21).

10 BLOCKING STATUTES AND THEIR RELATIVE LACK OF ENFORCEMENT

11 7. BLOCKING STATUTES, PAST AND PRESENT Since the 1950s, several countries have enacted Blocking Statutes to react against what they saw as an abusive extraterritorial enforcement of US law. 1st Blocking Statute of 1947: the Ontario State Act (Canada) was adopted as a means to oppose an injunction of the Federal Court of NY, targeting a company suspected of antitrust practices, to transfer documents to the US. (During the same period, several other countries enacted similar statutes). In the UK - The 1975 Evidence Act and Standard Disclosure Procedural Rules: these require a party to disclose evidence requested by litigants only if it helps or harms either party s case in the litigation. - The 1980 Protection of Trading Interests Act states that national interests may be in opposition to discovery requests.

12 8. THE FRENCH BLOCKING STATUTE The French Blocking Satute, adopted in 1968 and modified in 1980, is a criminal law which prohibits the disclosure of information and documents to foreign legal entities and natural persons except when such disclosure is required by the Evidence Convention Article 1 prohibits exporting certain types of documents to foreign public authorities unless the request is made under the Hague Convention; Article 1bis prohibits private parties to request, investigate or communicate in writing, orally or by any other means, documents or information relating to economic, commercial, industrial, financial or technical matters leading to the establishment of proof with a view to foreign administrative or judicial proceedings or as part of such proceedings ; Article 3 states that any violation of the statute may be punished by imprisonment of 6 months and by a fine of 18,000 (multiplied by 5 for legal entities).

13 9. ITS RELATIVE LACK OF ENFORCEMENT Since the Aerospatiale decision, US courts have shown little interest in paying attention to Evidence Convention procedures US courts refuse to consider that French companies are truly at risk of liability for abiding by discovery requests outside the Evidence Convention. They consider that these companies cannot allege that they would suffer any hardship as a result of their compliance with a US discovery order. Companies in France are faced with a dilemma: if they refuse to respond to a discovery request in order to respect French criminal law, the US court may inflict sanctions upon them and may even decide to rely only on the elements provided by the other parties. Practitioners thus rarely advise their clients to oppose the necessity of Letters of Request to US courts. However the Blocking Statute has allowed a couple of French companies to reach a more acceptable deferred prosecution agreement. They were given the possibility to appoint a French independent monitor in charge of the firm s internal control who reports to the French administration which then decides what to transfer to the DoJ.

14 REASONS FOR HOPE

15 10. CASE LAW AND ADMINISTRATIVE DECISIONS In Europe as well as in the US, there may be signs of a better understanding In France: In 2007, based on the exclusivity of the Evidence Convention, the Cour de cassation ordered a French attorney to pay a 10,000 fine for violation of the Blocking Statute. (he had tried to obtain information on the way decisions had been taken by the directors of a French insurance company in the Executive Life case regarding Vivendi). In 2009, the National Data Protection Authority (CNIL) issued guidelines stating that any transmission of personal data in the context of discovery must compulsorily be conducted under the Evidence Convention. In the US: In 2014, the Delaware Court of Chancery (in another Vivendi case) put in balance the Aerospatiale criteria and accepted to give to the defendants 38 days to transfer the requested documents according to the Evidence Convention. Interestingly, the Court underlined that every country naturally prefers its own methods of litigation; otherwise, it would change them.

16 11. ABUSE OF DISCOVERY IN THE DIGITAL AGE US-style e-discovery is one of the greatest concerns of practitioners /litigants Where Letters of Request are supposed to delay proceedings, US-style e-discovery is considerably time-consuming and increases the costs of proceedings to an unbearable level (50% to 90% of the cost of the total litigation costs); Given that US courts have failed to limit the scope and amount of discovery permitted, e- discovery is prone to abuse since it is often used as a tool to force settlement by increasing an opponent's costs through unnecessary discovery requests (the number of s sent every year is said to be superior to 50 trillion); It is the principal cause of the congestion of the US judicial system given that litigants are often unable to comply with deadlines.

17 12. EU DATA PRIVACY RIGHTS v/ US DISCOVERY EU Privacy law may be seen as a new and efficient kind of blocking statute In the EU, privacy, and especially, data protection, is a human right (Article 8 of the European Convention of Human Rights and Articles 7 and 8 of the EU Charter of Fundamental Rights). The 95/46 Data Protection Directive (introduced into domestic law in the EU 28 Member States) generally prohibits transfers of personal data to third countries (ex. the US) that do not ensure an adequate level of protection of the data. There is no such prohibition if the person subject to a discovery request obtains the consent of those whose data will be transferred or shows that the transfer is necessary for the purposes of the legitimate interests of this person. Compliance in order to defend or prosecute a case may qualify as a legitimate interest under the condition that the requested party s interest is not outweighed by the interests for fundamental rights and freedoms of the data subject (see Article 29 Working Party Report 158) and that the transfer is in compliance with international rules of cooperation in criminal or civil proceedings, notably the Evidence Convention (see the EU Commission s communication of 6 th November 2015 following the Schrems case law).

18 DATA PROTECTION AND THE EVIDENCE CONVENTION

19 13. EU DATA PROTECTION LAW AND THE ISSUE OF EXTRATERRITORIALITY The extraterritoriality of US discovery rules is now faced with the extraterritorialy of EU data protection law The 95/46 Data Protection Directive applies to the processing of personal data processed in whole or in part inside the EU by automatic means, and to the processing other than by automatic means, of personal data which form part of a filing system. (in a rare ruling in Salerno v. Lecia, Inc. - a US court denied a motion to compel discovery because production of the documents requested would violate both the Directive and the German Data Protection Act.) The future Data Protection General Regulation is even more expressly extraterritorial: it will apply to the processing of the personal data of data subjects residing in the EU by controllers established in a third country where its processing activities are related to the offering of goods or services or to the profiling of individuals (automated processing to assess personal aspects, such as performance at work, economic situation, health, personal preferences )

20 14. THE SAGA OF THE MICROSOFT CASE This case is attracting a great deal of media coverage In 2013, the DoJ applied for a search warrant ordering Microsoft to produce the private s of a Microsoft user who the government suspected of being a drug trafficker. Microsoft agreed to turn over the metadata, but not the content of the s stored in Ireland. In 2014, Microsoft was unsuccessful in convincing the first two Courts that the order was an illegal attempt to enforce a warrant outside the US, the DoJ arguing that a search warrant for data should be treated more like a subpoena, which is not subject to territorial limitations. In 2015, the case is currently before the 2 nd Circuit Court of Appeal. Although this case is criminal and Microsoft has not yet directly raised the issue of the applicability of EU Data Protection Law, it is mentioned in some amicus briefs.

21 15. THE SCHREMS CASE-LAW OF OCTOBER 6, 2105 The decision of the ECJ on the Schrems case, which is even more illustrative of the clash of cultures between the US and Europe, may have important consequences on discovery at a transatlantic level The ECJ was asked through a preliminary ruling to decide whether, under the Data Protection Directive, the transfer of data of Facebook s European subscribers to its cloud in the US, was valid based on the EU Commission s decision of 2000 which set forth the safe harbor regime. It ruled that, in spite of such decision, national Data Protection Authorities, when hearing a claim lodged by a person concerning his or her rights to the protection of their data, must be able to examine, with complete independence, whether the transfer of data complies with the 95/46 Directive. It nullified the Commission s decision on safe harbor essentially because US laws, in the absence of effective judicial redress, do not provide for any possibility for an individual to pursue legal remedies in order to have access to his or her personal data or to obtain the rectification or erasure of such data.

22 WHAT S NEXT?

23 16. SOLUTIONS FROM BOTH THE US AND THE EU The revival of the Blackmun approach is part of the solution The dissenting opinion of Justice Blackmun in Aerospatiale should be heard by US courts, since it may represent a good compromise by trying to help restore a climate of cooperation and goodwill necessary to the functioning of the international legal and commercial systems by respecting the Evidence Convention as a first resort. On the one hand, US courts should abandon the case by case comity analysis and apply a general presumption of first resort to Evidence Convention procedures. On the other hand, Letters of Request should be executed by European Authorities as fast as possible, within three to six months for instance. (By comparison, Article 10.1 of the 1206/2001 EU Regulation on cooperation between the courts of Member States in the taking of evidence in civil and commercial matters obliges the requested courts to execute a request at the latest within 90 days )

24 17. MODERNIZING THE EVIDENCE CONVENTION lnstead of drafting a new Convention, it is preferable to modernize the existing one especially with regard the following aspects Article 23 of the Convention should be rewritten to include a clear, and non-optional, definition of pre-trial discovery which would avoid fishing expeditions; In a way similar to the 1206/2006 EU Regulation, model Letters of Request, requiring a more specific description of the information and documents requested, should be annexed to the Convention; A time limit to execute Letters of Request should be provided for; It should be explicitly specify that the Convention be used in first resort; An annexed Protocol should establish data protection standards to reduce conflicts due to the application of conflicting EU/US laws and case-law.

25 We see neither justice nor injustice that does not change its nature with a change of climate: three degrees of latitude reverse all jurisprudence; a meridian decides the truth but also Justice does not consist in customs, but it resides in natural laws, common to every country Pascal, Les Pensées, 1670