U.S. Federal Courts in the last few years have issued a number of decisions expanding the scope of 28 U.S.C. § 1782, a federal statute that allows parties to use U.S. discovery procedures to obtain evidence for foreign and international legal proceedings.
The statute in question provides as follows:
§1782. Assistance to foreign and international tribunals and to litigants before such tribunals.
(a) 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.
(b) 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.
Although § 1782 dates back to the mid 19th century, it did not receive widespread attention until recently. In 2004, the United States Supreme Court in Intel Corp. v. Advanced Micro Devices, Inc., 542 U.S. 241, 124 S. Ct. 2466, 1592 L. Ed.2d 355, clarified and expanded the extent to which parties may use U.S. discovery procedures to obtain testimony and documents for use in litigation and other proceedings outside the United States. The Supreme Court made it clear that documents and testimony can be secured from U.S. sources for use not only in matters pending before courts and tribunals but also matters pending before bodies of a quasi-judicial or administrative nature. The court also made it clear that there is no reciprocal foreign discoverability requirement for use of § 1782.
The Supreme Court in Intel declared that the District Courts have broad discretion to decide whether to order a witness or entity to provide testimony and documents. The Intel case involved a complaint alleging that Intel had violated European competition law in a proceeding before the Directorate-General for Competition of the Commission of the European Communities. The Commission rejected plaintiff's request for documents that Intel had previously produced in a private antitrust lawsuit between Intel and a third party in the U.S. District Court in Alabama. Plaintiff then filed an application under 28 U.S.C. § 1782(a) in the U.S. District Court for the Northern District of California where Intel was located seeking an order for production of the documents. The District Court rejected the request on the basis that the Commission had already declined to order the production. The Court of Appeals reversed the decision and remanded the case to the District Court to rule on the merits of plaintiff's application. The Supreme Court accepted review of the case and affirmed the Court of Appeals decision.
The Supreme Court emphasized the wide discretion which the District Court has in granting or rejecting § 1782(a) requests. It stated that there are four main factors that the District Court should consider on ruling on such a request. The first is that the need for § 1782(a) aid is generally not as apparent when evidence is sought from a participant in the foreign proceedings since the foreign tribunal would have jurisdiction over those appearing before it and could itself order the evidence produced.
Secondly, the Supreme Court noted that the District Court "may take into account the nature of the foreign tribunal, the character of the proceedings underway abroad, and the receptivity of the foreign or court or agency abroad to U.S. Federal Court judicial assistance."
The third factor is that "a district court should consider whether § 1782(a) requests conceal an attempt to circumvent foreign proof-gathering restrictions or other policies of a foreign country for the United States." Intel's argument that policy reasons required a foreign discoverability requirement was rejected.
Fourth, the Supreme Court pointed out that the District Court can reject or modify unduly intrusive or burdensome requests.
On remand, however, the District Court exercised its discretion, considered the substance of the application and denied it for three reasons. The first was that Intel was already a participant in the Commission proceedings and the Commission had jurisdiction over Intel to require production. The District Court further observed that the Commission was not receptive to judicial assistance from U.S. Courts and, finally, that plaintiff's application appeared to be an attempt to circumvent the Commission's decision.
A significant aspect of the decision is that the District Court cannot deny the application merely because the testimony or documents would not be discoverable in the foreign jurisdiction. The Court broadly interpreted the phrase "a proceeding in a foreign or international tribunal" to include foreign administrative and quasi-judicial proceedings. The Court also stated that the proceeding for which discovery is sought must only be within reasonable contemplation and need not either be pending or imminent at the time the discovery is sought.
Several cases in the District Courts following the Intel decision reached varying results based largely on differing factual situations during 2004 and 2005.
In December 2006, the U.S. District Court in Atlanta decided In re Application of Roz Trading, Ltd., WL 3741078, N.D. Ga. Dec. 19, 2006, a case which has attracted considerable attention because it extended the scope of § 1782(a) to include applications for discovery of evidence from U.S. entities for use in international arbitration proceedings. Roz Trading was a Cayman Islands company involved in a dispute with Coca Cola which was subject to international arbitration in Vienna. Roz applied in U.S. District Court for an order requiring Coca Cola's parent in the U.S. to produce documents for use in the Austrian arbitration proceedings. The request apparently had not been directed first to the arbitral tribunal. The Court nevertheless concluded that Roz Trading "meets the requirements of the statutes, and is, thus entitled... to seek judicial assistance for use in the foreign proceeding."
Prior to 1964, the statute had referred only to "judicial proceedings." Congress then amended it to include "a proceeding before a foreign or international tribunal." Hans Smit, who served as Reporter to the Commission and Advisory Committee on International Rules of Judicial Procedure, foreshadowed Roz Trading in a law review article stating that "tribunal" includes "administrative and arbitral tribunals." 65 Colum. L. Rev. 105, 1026-27 and nn. 71, 73 (1965).
The U.S. District Court in New Jersey in April, 2007 concluded that an arbitral tribunal covened pursuant to an agreement that disputes between nationals of the two countries would be resolved by "arbitration governed by international law" was sufficiently governmental in nature even under earlier more restrictive pre-Roz Trading interpretations to allow the granting of a § 1782 discovery request. In re Oxus Gold, PLC, Misc. 06-82, 2007, U.S. District LEXIS 24061 (D.N.J. 2 April 2007).
On September 13, 2007 a Minnesota court affirmed an earlier ex parte granting of a
§ 1782(a) discovery order at the request of Hallmark Capital, a Canadian corporation, which was a claimant in an arbitration in Israel, for production of documents by a non-party shareholder/officer of the defendant in the Israeli arbitration involving breach of contract to pay a finder's fee. The individual to whom the request was directed resided in Minnesota, and the documents were located there. (U.S. District Court District of Minnesota In re: Application of Hallmark Capital Corporation, Civil No. 07-MC-39 (JNE/SRN).
Several other U.S. District Court cases in 2006 involved applications for § 1782 discovery orders. In Fleishman Inn v. McDonald's Corp., 466 F. Supp. 2d 1020, 25 IER Cases 1482, the District Court in Illinois granted a § 1782 discovery order at the request of a former chief executive of a Brazilian company for use in two Brazilian lawsuits involving wrongful termination of employment.
In Phillips v. Veierwaldes, 466 F.3d 1217, C.A. 10 (Colo) 2006, a court in Colorado granted a § 1782 discovery order at the request of English estate administrators for production of documents in an accounting of U.S. assets and liabilities of a decedent's partnership for use in an estate account case in England.
In Lopes v. Lopes, 180 Fed. Appx. 874, 2006 WL 1308542, a Florida court granted an ex parte § 1782 discovery order at the request of a resident of Brazil for the production of bank account documentation regarding accounts in the name of the applicant's husband in connection with divorce proceedings in Brazil.
Section 1782 has found particular application in intellectual property disputes. For example, in In re Proctor & Gamble Company, 334 F. Supp.2d 1112 (E.D. Wis. 2004) the manufacturer defendant in a patent infringement suit was allowed to obtain discovery in the U.S. for use in proceedings in five different countries. The District Court emphasized the greater efficiency involved in ordering discovery from persons located in the district rather than having to proceed first in the five foreign nations.
In Infineon Technologies A.G. v. Green Power Technologies, Ltd., 2005 U.S. Dist. LEXIS 11187, (D. D.C., 2005) a declaratory action concerning validity of a patent, the district court applied Intel factors, balanced them and granted the defendant's request for production of documents for use in a German proceeding similar to the proceedings before the district court. See also U.S. Philips Corp. v. Iwasaki Elec. Co., 142 Fed. Appx. 516, 2005 WL 1874992.
Not surprisingly there are divergent views concerning the expanded scope of § 1782(a) discovery orders. In favor of this trend is the argument that increasing globalization frequently involves two or more jurisdictions and the ability to obtain testimony and documents from litigants or third parties for use in a proceeding or in multiple proceedings permits parties to streamline gathering of relevant evidence, reduces overall legal costs and results in a quicker more cost-effective resolution of multi-jurisdictional litigation on the merits or by way of settlement.
In countering arguments for a more restrive interpretation, courts and commentators also point to the wide discretion of the District Courts to grant or deny assistance, the protections which the court can impose against overly broad requests and the right of the foreign tribunal to accept or reject the evidence produced. Hope is also expressed that the U.S. approach will encourage foreign countries to provide reciprocal means of assistance to U.S. courts and litigants.
On the other hand, opponents of an expansive interpretation of § 1782 particularly criticize its application to private arbitration proceedings. They argue that while judicial assistance for the purpose of obtaining evidence for an arbitration may exist in many countries, generally any application for judicial assistance is subordinate to the prior approval or permission of the arbitral tribunal. Fear is expressed that § 1782 is not suited for use in connection with arbitration proceedings and may open the door to possible judicial interference by U.S. Courts with the arbitral process which would be contrary to the parties expectations when agreeing to arbitration. The argument is made that a U.S. Court should not substitute its own judgment for that of the parties' arbitral tribunal and the parties may have agreed to the arbitration proceeding precisely because they do not wish to be subjected to interim court orders.
It is further argued that the general absence of reciprocity places persons who reside or are found in the U.S. at a disadvantage since there is generally not a comparable disclosure obligation in the home country of the applicant. Foreign companies outside the reach of U.S. Courts would thus be given a discovery weapon against U.S. opponents that could not in turn be used against the foreign parties. It has been suggested in some quarters that Congress should intervene to reverse or limit the extension of § 1782(a), especially as it applies to arbitration proceedings.
In spite of these arguments, the trend is clearly to expand the scope of § 1782.
In utilizing § 1782, several provisions need to be kept in mind by the practitioner. Discovery may be sought from "a person" who "resides or is found" in the district in which the application for assistance is filed. As previously discussed, the discovery request need not be directed to a party to the litigation and the term "person" has been read to encompass various types of organizations, including corporations, partnerships and other associations. Sovereign governments, however, do not qualify as persons under this provision. At least one case has limited the scope of this statute to evidence physically located within the United States. In re Application of Sarrio, S.A., 119 F. 3d 143 (2d Cir. 1997). Orders are generally limited to testimony and production of documents and not interrogatories or requests for admissions.
Some controversy continues to exist concerning whether the discovery sought must involve evidence that would be discoverable under the laws of a foreign jurisdiction. The majority of courts seem to hold that § 1782(a) does not require that evidence be discoverable under foreign law, but where the request is made by a private litigant rather than the foreign tribunal, some courts apply a foreign discoverability requirement to prevent use of § 1782(a) to circumvent the foreign jurisdiction's discovery rules and to avoid putting U.S. litigants at a disadvantage if their right to discovery in the foreign jurisdiction is limited or non-existent.
Since the trial court has great discretion and judicial assistance under § 1782(a) is not mandatory the district courts have wide latitude in determining whether and to what extent to grant or deny applications. They also have great discretion imposing terms and conditions on the discovery, including the assessment of costs.
U.S. District Courts, including post-Intel decisions, continue to hold that while there is no reciprocity or discoverability requirement in the foreign jurisdiction, § 1782 cannot be used to circumvent rulings of a foreign tribunal or where the foreign tribunal is not receptive to U.S. judicial assistance. Schmitz v. Bernstein, 376 F.3d 79 (2nd Cir. 2004); In re Servico Pan Americano Deproteccion, 2004 U.S. Dist. LEXIS 24430 (SDNY 2004).
The courts have generally interpreted the provision concerning recognition of privilege as including both federal and constitutional privileges as well as statutory immunity and privileges provided under foreign law.
The statute allows the order to require following the practice and procedure of the foreign country but "to the extent... 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."
Finally § 1782(b) recognizes that testimony or documentary evidence may be provided voluntarily by a person within the United States for use in a proceeding in a foreign or international tribunal.
With the increasing globalization of litigation and arbitration, the use of discovery requests under § 1782(a) will undoubtedly continue to increase. Although recent cases have given considerable guidance, there is still room for disagreement and controversy among the courts as well as the possibility of intervention by Congress. This is an area which will be of increasing importance to lawyers involved in international litigation or arbitration. Overall, the expansion of § 1782's scope seems consistent with the multi-jurisdictional character of international litigation and arbitration.