The Opportunities and Challenges of Using U.S. Discovery in Aid of Foreign and International Proceedings

Transcription

1 Using U.S. Discovery in Aid of Foreign and International Proceedings The Opportunities and Challenges of Using U.S. Discovery in Aid of Foreign and International Proceedings Harout Jack Samra DLA Piper LLP Miami, Florida INTRODUCTION Numerous potential avenues must be considered when attempting to access U.S. discovery in aid of foreign and international proceedings, such as the use of 28 U.S.C. 1782(a) for civil or criminal matters, and arbitrations; submitting written witness declarations, preparing witnesses to testify in foreign proceedings; and the use of rogatory letter requests. International disputes whether in civil, commercial, criminal matters, or arbitration involving multiple jurisdictions and thus different legal systems have become the norm rather than the exception.

2 U.S. discovery rules and procedures may offer additional means to obtain evidence that are unavailable under other countries procedural rules. As a result, recourse to the broader options available can be attractive to parties engaged in disputes outside the United States. This is particularly important where only one of the parties is present in the U.S. and therefore susceptible to U.S. discovery. In such a case, the availability of U.S. discovery may even present an important strategic advantage. Factors to consider include the circumstances under which U.S. discovery may be employed, the foreign fora where evidence obtained through such discovery can be used, and the logistical coordination necessary with international co counsel so that any evidence obtained may benefit the client in a timely fashion. Generally, commentary on this issue has centered on 28 U.S.C. 1782(a). However, additional avenues exist such as letters rogatory and may prove useful depending on the circumstances. This article considers such alternatives and explores other potential issues that may arise when engaged in U.S. discovery in non U.S. disputes. Voluntarily Providing Testimony or Evidence The U.S. Congress has "long recognized the freedom of individuals to provide information voluntarily for use in foreign proceedings." 1 This policy is most clearly expressed through 28 U.S.C. 1782(b), the statute's oft neglected second provision, which provides the following in light of section 1782(a)'s framework for compelling evidence in aid of foreign proceedings: This chapter does not preclude a person within the United States from voluntarily giving his testimony or statement, or producing a document or other thing, for use in a proceeding in a foreign or international tribunal before any person and in any manner acceptable to him. As a result, discovery may be taken pursuant to section 1782(b) "if a U.S. person (an individual or an entity) is willing to give evidence voluntarily in aid of a foreign proceeding." 2 Although this may seem unremarkable, several countries, including Brazil, do not permit evidence to be taken unless it is through "government or court approved 1 Young v. US Dept. of Justice, 882 F. 2d 633, 637 (2d Cir. 1989) (citing 28 U.S.C. 1782(b)). 2 Noah Siskind Gitterman, "Voluntary Provision of Evidence in the U.S. in Aid of a Non-U.S. Proceeding", in Proskauer on International Litigation and Arbitration, available at

3 process." 3 The statute requires "no formal procedure, or governmental or judicial approval." 4 The parties (i.e., the person or entity providing the evidence and the person or entity taking the evidence) "may agree on a time, place and method for producing the documents or taking the testimony." 5 Even under this approach, however, the parties "would still need to conform to whatever procedural requirements need to be met under the local rules governing the non U.S. proceeding" for example, by agreeing "to adhere to any restrictions that are imposed by the non U.S. tribunal." 6 Significantly, one commentator has observed "the non U.S. tribunal s own rules may require that the evidence... be taken through a court ordered process." 7 Letters Rogatory The United States is a party to the Convention on the Taking of Evidence Abroad in Civil or Commercial Matters (the "Hague Evidence Convention"). 8 The Hague Evidence Convention's purpose is to "reconcile different, often conflictive, discovery procedures in civil and common law countries." 9 It also serves to "streamline[] procedures for compulsion of evidence, utilizing a form 'letter of request' which can be sent directly by the court in the U.S. to a foreign central authority, eliminating the cumbersome 'diplomatic channel.'" 10 Notably, Article 1 of the Hague Evidence Convention explicitly limits the Convention's scope to "civil and commercial matters." One commentator summarized the process of obtaining evidence through diplomatic channels by using letters rogatory as follows: The diplomatic channel will usually begin with a request to the non U.S. court to issue a letter rogatory requesting the assistance of a competent authority within the U.S. to compel discovery from persons located in the U.S. (either documents or testimony). The non U.S. court will likely utilize its own procedures for routing the letter rogatory to its country s embassy in Washington, D.C., at which point the letter may be sent to the Department of State, which will forward it to the Department of Justice, Civil Division, Office of International Judicial Assistance, which is the office responsible for processing 3 Id U.S.C. 1782(b). 5 Id. 6 Id. 7 Id. 8 See 9 See 10 See id. (citing International Soc''y for Krishna Consciousness, Inc. v. Lee, 105 F.R.D. 435, (S.D.N.Y. 1984); Philadelphia Gear Corp. v. American Pfauter Corp., 100 F.R.D. 58, 59 (E.D. Pa. 1983)).

4 and executing such requests. The letter may also be sent [by the requesting court] directly to the Department of Justice s Office of International Judicial Assistance. Once it is processed by the Department of Justice (which can take one month or more), the letter will typically be sent to the U.S. Attorney s Office for the district in which the person or entity from whom the evidence is required resides. The U.S. Attorney s Office will then make the appropriate application to the federal district court seeking the requested evidence on behalf of the non U.S. court. After the letter rogatory is executed, it and any evidence that was obtained will be routed back to the non U.S. court through the same channels. Under the Hague Convention on the Taking of Evidence Abroad, letters rogatory must be submitted directly to the Office of International Judicial Assistance at the Department of Justice, which the U.S. has designated as its central authority under the Convention.... [L]etters rogatory that come from the courts of non signatory countries can also be sent directly to the Office of International Judicial Assistance at the Department of Justice, without going through the Department of State. Generally, the diplomatic staff of the non U.S. court s embassy in Washington, D.C. will determine the appropriate channel to use. 11 Although the Hague Evidence Convention represented a significant step and permitted far greater access to U.S. discovery to foreign disputes, it has largely been replaced by 28 U.S.C. 1782(a), which is generally regarded as far less cumbersome and more timely. Although the Hague Evidence Convention permits only "Judicial authorit[ies]" to have standing to request assistance, 28 U.S.C "permits a wider range of persons and entities to make requests." 12 The Use and Overuse of 28 U.S.C. 1782(a) As noted, despite the effectiveness of letters rogatory, it is fair to say the traditional procedure effectively has been replaced by 28 U.S.C. 1782, which provides that any interested person may apply for an order by a U.S. district court requiring the provision of testimony or documents by a person who resides or is found in the district, for use in a proceeding in a foreign or international tribunal. 13 The U.S. Supreme Court has addressed section 1782 only once before in Intel Corp. v. Advanced Micro Devices, Inc., 542 U.S. 241 (2004), in which the Court held that the European Commission and EU courts dealing with EU competition law and regulatory claims qualified as "tribunals" under section The Court, however, also clarified the statute's requirements and eliminated judicially 11 Noah Siskind Gitterman, "Using Diplomatic Channels to Compel Discovery in the U.S.", in Proskauer on International Litigation and Arbitration, available at 12 Morris H. Deutsch, Judicial Assistance: Obtaining Evidence in the United States, Under 28 U.S.C 1782, for Use in a Foreign or International Tribunal, 5 BOSTON COLLEGE INT'L & COMP. L. REV. 175 (1982) U.S.C. 1782(a).

5 formulated restrictions. For example, the Court permitted the statute to be asserted in connection foreign legal proceedings that were in reasonable contemplation. 14 Thus, the Court declined to require that the proceedings in relation to which assistance is being sought actually be filed and pending. 15 Similarly, the Court also declined to require that the evidence sought pursuant to the section 1782 request be discoverable in the foreign jurisdiction. 16 The two holdings considerably expanded the scope of evidence discoverable pursuant to section The Court, however, also noted that there is no requirement of "reciprocity" pursuant to which the foreign state would provide the same discovery. The attached presentation materials go into greater detail concerning the requirements of section 1782 and some of the possibilities and challenges it presents. Despite these significant expansions, the Court left open the possibility of whether discovery pursuant to section 1782 is available with respect to international arbitration proceedings. Since Intel, the Circuit Courts have divided sharply on the question of whether such discovery is available in the arbitration context. Following its decision in Consorcio Ecuatoriano, the Eleventh Circuit (Alabama, Florida, and Georgia) became the first and only Circuit Court of Appeals to conclude that arbitral tribunals qualify under The only other Circuit Court to address the issue after Intel, the Fifth Circuit Court of Appeals (Louisiana. Mississippi, Texas) in El Paso Corp. v. La Comision Ejecutiva Hidroeclectrica del Rio Lempa, No , 2009 WL (5th Cir. Aug. 6, 2009), reached the opposite conclusion, noting that 1782 does not apply to discovery for use in a private international arbitration. 17 The Second Circuit (Connecticut, New York, Vermont) also reached a similar conclusion in National Broadcasting Company v. Bear Stearns & Co., 165 F.3d 184 (2d Cir. 1999), but has not yet addressed the issue after Intel. 14 Intel at Id. 16 Id. 17 See also Republic of Kazakhstan v. Biedermann Int'l, 168 F.3d 880, 881 (5th Cir. 1999).

6 Conclusion Although the process of seeking discovery pursuant to letters rogatory may be "like flinging a message in a bottle into the ocean and hoping it would wash up on American shores," 18 the Hague Evidence Convention s introduction of the method represented a dramatic step forward over the previously uncoordinated diplomatic regime. The codification and subsequent development of Section 1782 has represented another significant step. Despite the numerous challenges that still exist, it is clear that opportunities to obtain a strategic advantage in high stakes international litigation through U.S. discovery are available. 18 Michael Campion Miller, Alejandro G. Rosenberg, & Michael Stoll, 28 U.S.C and the Evolution of International Judicial Assistance in United States Courts, THE FEDERAL LAWYER 44 (May 2012)

7 Using U.S. Discovery in Aid of Foreign and International Proceedings 28 U.S.C. 1782: An Introduction Konstantin Rivkin Kaganer and Partners Moscow, Russia Yas Banifatemi Shearman & Sterling LLP Paris, France Marney Cheek Covington & Burling LLP Washington, DC Reprinted with Permission

8 3/27/ U.S.C. 1782: An Introduction Harout Jack Samra DLA Piper LLP (US) 28 U.S.C. 1782: Background Although 28 U.S.C continues to be relatively unknown, it is an extremely powerful tool. In the United States, 1782 permits those engaged in litigation or other proceedings abroad to obtain, by court order, relevant information that is located in the United States. An interested party to a foreign proceeding may obtain documents or other relevant information, including depositions of individuals. 1

9 3/27/ U.S.C. 1782: Background Twin Aims of 1782 Providing efficient means of assistance to participants in international litigation. Encouraging foreign countries by example to provide similar means of assistance to United States courts. Statutory Requirements The application may be made by a foreign or international tribunal or any interested person. The discovery must be for use in a proceeding before a foreign or international tribunal. The person must reside or be found in the district in which the application is made. 2

10 3/27/2013 Intel v. AMD, 542 U.S. 241 (2004) Intel is, to a large degree, the watershed case as it relates to It was also the first time that the Supreme Court had interpreted the statute. It provides the most authoritative guide to the interpretation of the statute, laying out the statute s requirements and outlining the factors that the court must consider in employing its discretion. Intel v. AMD, 542 U.S. 241 (2004) Advanced Micro Devices (AMD) brought an antitrust complaint in the European Commission s Antitrust Directorate (ECAD) against Intel, its competitor in the microprocessor industry. AMD sought an order in the U.S. District Court for the Northern District of California for Intel to produce certain documents for use in the ECAD s investigation. 3

11 3/27/2013 Intel v. AMD, 542 U.S. 241 (2004) 1. The Supreme Court took a broad view of who is an interested person under Under the ECAD s investigatory structure, AMD was a complainant rather than a party to litigation. While AMD would not have been entitled to discovery under the Federal Rules of Civil Procedure because it was not an official party to the quasi-judicial proceeding, it nonetheless was entitled to seek the production of documents under Intel v. AMD, 542 U.S. 241 (2004) 2. The Court interpreted the foreign or international tribunal requirement expansively. Applies to quasi-judicial authorities, including investigating magistrates, as well as foreign courts and international tribunals, whether or not the United States is a party to the agreement that created that tribunal. The Supreme Court held in Intel that the ECAD qualified as a tribunal because it served as a first instance decision maker with the authority to determine liability and impose penalties. 4

12 3/27/2013 Intel v. AMD, 542 U.S. 241 (2004) 3. The Court held that the proceeding before a foreign tribunal is not required to be imminent or pending. It is not necessary... for the proceeding to be pending at the time the evidence is sought, but only that the evidence is eventually to be used in such a proceeding. he proceeding simply must be in reasonable contemplation at the time the discovery is sought. Intel v. AMD, 542 U.S. 241 (2004) 4. The Supreme Court emphasized that Section 1782 has no comity requirement. To obtain discovery under the statute, a party is not required to show that the same discovery is available in the foreign tribunal s jurisdiction, nor does the statute require that reciprocal discovery be available to all parties in the underlying dispute. 5

13 3/27/2013 A Matter of Discretion: Four Balancing Factors Finally, the Supreme Court emphasized that district courts have discretion over whether to grant a party s Section 1782 request for discovery. The Court identified at least four discretionary factors for a district court to weigh, including: 1. Whether the person from whom discovery is sought is a participant to the foreign proceeding it is generally more difficult for the deciding tribunal to order the production of discovery from a foreign nonparticipant than from a party. 2. The nature of the tribunal, the character of the proceedings, and the receptivity of the foreign court or agency to judicial assistance. 3. Whether the discovery request seeks to circumvent applicable discovery limits in the foreign jurisdiction. 4. The intrusiveness of or burden imposed by the request and Arbitration Since Intel, the courts have been divided as to whether arbitration is a proceeding under 1782 since Intel. In the first two cases on this point since the Supreme Court s Intel decision, Oxus Gold and In re Roz, the district courts indicated that the courts believed it was. Since then, however, differing positions have developed. Some courts, though not all, have been fairly reluctant to hold that contractual arbitration between two private parties fall within the definition of proceedings. However, in the few cases on point, the courts have held that disputes arbitrated pursuant to a treaty, such as investor-state disputes, do fall within the definition of proceedings. Though trends have developed, the law is clearly in a state of flux. 6

14 3/27/ and Arbitration To a large degree, this problem arises in the wake of the Supreme Court s Intel decision, in which it cited to Professor Hans Smit for the following proposition: The term tribunal includes investigating magistrates, administrative and arbitral tribunals, and quasi-judicial agencies, as well as conventional civil, commercial, criminal, and administrative courts. Arbitration and 1782: Since Intel In the first case to address the issue with respect to private arbitrations, In re Application of Roz Trading, 469 F.Supp.2d 1221 (N.D.Ga. Dec 19, 2006), the district court upheld an order granting discovery for use in a private international commercial arbitration. Just four months later, the district court in In re Oxus Gold PLC, 2007 U.S. Dist. LEXIS (D.N.J. Apr. 2, 2007), similarly upheld an order permitting 1782 discovery because the arbitration was to be conducted within a framework defined by two nations and is governed by the UNCITRAL Rules, as required by the UK-Kyrgyzstan BIT. 7

15 3/27/2013 Arbitration and 1782: Since Intel Since Roz Trading, however, several courts, including the 5th Circuit, have held that purely private commercial arbitrations did not fall within the scope of El Paso Corp. v. La Comision Ejecutiva Hidroeclectrica Del Rio Lempa, 2009 WL (5th Cir. Aug. 6, 2009). On the other hand, other courts have agreed with Roz Trading. In re Application of Babcock Borsig AG, No. 08-mc-10128, 2008 WL (D. Mass. Oct. 30, 2008). Application of Winning (HK) Shipping Co. Ltd., 2010 WL (S.D. Fla. Apr. 30, 2010). Conclusions Intel was successful to the extent that it brought a great deal of clarity and analytical rigor to 1782 that had been lacking, rendering 1782 a far more powerful tool. As made plain in the context of arbitration, however, there continues to be a great deal of turbulence with the application of 1782, though there is a great deal of authority supporting its use in arbitration. Despite these changing interpretations, 1782 can be effectively employed to obtain strategic and tactical advantages in international proceedings. 8

16 Using U.S. Discovery in Aid of Foreign and International Proceedings PowerPoint Presentation: 28 U.S.C. 1782: An Introduction Konstantin Rivkin Kaganer and Partners Moscow, Russia Yas Banifatemi Shearman & Sterling LLP Paris, France Marney Cheek Covington & Burling LLP Washington, DC Reprinted with Permission

17 28 U.S.C. 1782: An Introduction Harout Jack Samra DLA Piper LLP (US)

18 28 U.S.C. 1782: Background Although 28 U.S.C continues to be relatively unknown, it is an extremely powerful tool. In the United States, 1782 permits those engaged in litigation or other proceedings abroad to obtain, by court order, relevant information that is located in the United States. An interested party to a foreign proceeding may obtain documents or other relevant information, including depositions of individuals. July 15,

19 28 U.S.C. 1782: Background Twin Aims of 1782 Providing efficient means of assistance to participants in international litigation. Encouraging foreign countries by example to provide similar means of assistance to United States courts. July 15,

20 Statutory Requirements The application may be made by a foreign or international tribunal or any interested person. The discovery must be for use in a proceeding before a foreign or international tribunal. The person must reside or be found in the district in which the application is made. July 15,

21 Intel v. AMD, 542 U.S. 241 (2004) Intel is, to a large degree, the watershed case as it relates to It was also the first time that the Supreme Court had interpreted the statute. It provides the most authoritative guide to the interpretation of the statute, laying out the statute s requirements and outlining the factors that the court must consider in employing its discretion. July 15,

22 Intel v. AMD, 542 U.S. 241 (2004) Advanced Micro Devices (AMD) brought an antitrust complaint in the European Commission s Antitrust Directorate (ECAD) against Intel, its competitor in the microprocessor industry. AMD sought an order in the U.S. District Court for the Northern District of California for Intel to produce certain documents for use in the ECAD s investigation. July 15,

23 Intel v. AMD, 542 U.S. 241 (2004) 1. The Supreme Court took a broad view of who is an interested person under Under the ECAD s investigatory structure, AMD was a complainant rather than a party to litigation. While AMD would not have been entitled to discovery under the Federal Rules of Civil Procedure because it was not an official party to the quasi-judicial proceeding, it nonetheless was entitled to seek the production of documents under July 15,

24 Intel v. AMD, 542 U.S. 241 (2004) 2. The Court interpreted the foreign or international tribunal requirement expansively. Applies to quasi-judicial authorities, including investigating magistrates, as well as foreign courts and international tribunals, whether or not the United States is a party to the agreement that created that tribunal. The Supreme Court held in Intel that the ECAD qualified as a tribunal because it served as a first instance decision maker with the authority to determine liability and impose penalties. July 15,

25 Intel v. AMD, 542 U.S. 241 (2004) 3. The Court held that the proceeding before a foreign tribunal is not required to be imminent or pending. It is not necessary... for the proceeding to be pending at the time the evidence is sought, but only that the evidence is eventually to be used in such a proceeding. he proceeding simply must be in reasonable contemplation at the time the discovery is sought. July 15,

26 Intel v. AMD, 542 U.S. 241 (2004) 4. The Supreme Court emphasized that Section 1782 has no comity requirement. To obtain discovery under the statute, a party is not required to show that the same discovery is available in the foreign tribunal s jurisdiction, nor does the statute require that reciprocal discovery be available to all parties in the underlying dispute. July 15,

27 A Matter of Discretion: Four Balancing Factors Finally, the Supreme Court emphasized that district courts have discretion over whether to grant a party s Section 1782 request for discovery. The Court identified at least four discretionary factors for a district court to weigh, including: 1. Whether the person from whom discovery is sought is a participant to the foreign proceeding it is generally more difficult for the deciding tribunal to order the production of discovery from a foreign nonparticipant than from a party. 2. The nature of the tribunal, the character of the proceedings, and the receptivity of the foreign court or agency to judicial assistance. 3. Whether the discovery request seeks to circumvent applicable discovery limits in the foreign jurisdiction. 4. The intrusiveness of or burden imposed by the request. July 15,

28 1782 and Arbitration Since Intel, the courts have been divided as to whether arbitration is a proceeding under 1782 since Intel. In the first two cases on this point since the Supreme Court s Intel decision, Oxus Gold and In re Roz, the district courts indicated that the courts believed it was. Since then, however, differing positions have developed. Some courts, though not all, have been fairly reluctant to hold that contractual arbitration between two private parties fall within the definition of proceedings. However, in the few cases on point, the courts have held that disputes arbitrated pursuant to a treaty, such as investor-state disputes, do fall within the definition of proceedings. Though trends have developed, the law is clearly in a state of flux. July 15,

29 1782 and Arbitration To a large degree, this problem arises in the wake of the Supreme Court s Intel decision, in which it cited to Professor Hans Smit for the following proposition: The term tribunal includes investigating magistrates, administrative and arbitral tribunals, and quasi-judicial agencies, as well as conventional civil, commercial, criminal, and administrative courts. July 15,

30 Arbitration and 1782: Since Intel In the first case to address the issue with respect to private arbitrations, In re Application of Roz Trading, 469 F.Supp.2d 1221 (N.D.Ga. Dec 19, 2006), the district court upheld an order granting discovery for use in a private international commercial arbitration. Just four months later, the district court in In re Oxus Gold PLC, 2007 U.S. Dist. LEXIS (D.N.J. Apr. 2, 2007), similarly upheld an order permitting 1782 discovery because the arbitration was to be conducted within a framework defined by two nations and is governed by the UNCITRAL Rules, as required by the UK-Kyrgyzstan BIT. July 15,

31 Arbitration and 1782: Since Intel Since Roz Trading, however, several courts, including the 5th Circuit, have held that purely private commercial arbitrations did not fall within the scope of El Paso Corp. v. La Comision Ejecutiva Hidroeclectrica Del Rio Lempa, 2009 WL (5th Cir. Aug. 6, 2009). On the other hand, other courts have agreed with Roz Trading. In re Application of Babcock Borsig AG, No. 08-mc-10128, 2008 WL (D. Mass. Oct. 30, 2008). Application of Winning (HK) Shipping Co. Ltd., 2010 WL (S.D. Fla. Apr. 30, 2010). July 15,

32 Conclusions Intel was successful to the extent that it brought a great deal of clarity and analytical rigor to 1782 that had been lacking, rendering 1782 a far more powerful tool. As made plain in the context of arbitration, however, there continues to be a great deal of turbulence with the application of 1782, though there is a great deal of authority supporting its use in arbitration. Despite these changing interpretations, 1782 can be effectively employed to obtain strategic and tactical advantages in international proceedings. July 15,