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Obtaining the evidence from the United States: section 1782 orders

The US statutory procedure known as “section 1782” can allow a litigant in non-US proceedings to obtain what is tantamount to full US-style discovery from a US based entity, for use in the foreign proceedings. This can be particularly valuable to litigants in jurisdictions that have limited procedures for disclosure of evidence, such as many civil law countries. However, it can also be a useful weapon in the armoury of litigants in other jurisdictions. This is particularly the case in relation to obtaining evidence from third parties, but also potentially to obtain from an opponent evidence not as readily obtainable (or not at a particular time) under the domestic jurisdiction’s own disclosure procedures.

Given its potential usefulness, and despite its longstanding history, the section 1782 procedure is perhaps less well known than might be expected, at least in jurisdictions with their own disclosure procedures, such as the UK. It is worthwhile revisiting the scope of the procedure, particularly in light of a recent US decision, which suggests that it may even be used in some cases to obtain evidence that is physically located outside the US.

What evidence can be sought?

Section 1782 of Title 28 of the United States Code (entitled “Assistance to foreign and international tribunals and to litigants before such tribunals”) essentially empowers a US district court to order a person who resides or “is found” in the relevant district to provide evidence for use in a proceeding in a foreign or international tribunal.

The evidence may be in the form of testimony (including depositions), documents and “other things”, subject to any “legally applicable privilege“. That includes privileges arising under either domestic US law or a relevant foreign law.

The procedure is not limited to supporting legal proceedings already on foot, but includes those “in reasonable contemplation”. Accordingly, this can provide an opportunity for a foreign litigant to obtain evidence at an earlier stage than might be available (or as readily available) under disclosure procedures in the foreign court.

What foreign “proceedings” qualify for support? The unsettled arbitration question

Section 1782 orders can be made pursuant to a “request made by a foreign or international tribunal or upon the application of any interested person”.

An “interested person” will most commonly be a litigant in the relevant foreign proceedings. However, it can also extend to others who have “participation rights” in the proceedings (such as a right to present evidence to the tribunal or a right to seek further review).

The much more problematic question is the definition of “a foreign or international tribunal”. While the US courts have accepted that this extends to various quasi-judicial administrative and regulatory proceedings, a key unresolved question concerns the status of foreign arbitral tribunals. Although US courts have generally accepted section 1782 requests in support of investor-state arbitrations, district courts have been sharply divided on the question of whether the statute is available in support of private commercial arbitrations (with the majority against). There is a dearth of authority at the appellate circuit court level.

In the absence of appellate court clarification, the key point is to be aware that the question of whether a section 1782 application may be an option in support of a private commercial arbitration is likely to depend on which US district court would hear the application (which will depend on where the target of the application is based). Seeking advice on this from local counsel will be essential.

Does it extend to documents located outside the US?

Another unsettled issue, not expressly addressed in the statute, is whether the statute has extraterritorial reach regarding the location of evidence. That is, does it extend to material that is in the custody or control of the US-based target but physically located abroad?

This question was recently addressed by the Eleventh Circuit appellate court in Sergeeva v Tripleton International Ltd. The court considered that the question was one of first impression (not bound by precedent) and concluded that:

“… the location of responsive documents and electronically stored information – to the extent a physical location can be discerned in this digital age – does not establish a per se bar to discovery under § 1782.”

This issue is important as such an extraterritorial reach potentially allows section 1782 to be used as a route to access documents held outside the US by a non-US company, on the basis of the company’s affiliation with a US-based company. This is provided that it can be established that the relationship was sufficiently close that the US company had the requisite degree of control over the documents (under the normal control test applied in US domestic discovery). For example, in the Sergeeva decision, the court granted a wife in Russian divorce proceedings orders compelling the production of documents held in the Bahamas by an affiliate of a US-based company. This was on the basis of circumstantial evidence that the two companies regularly shared documents and information.

However, there is substantial prior authority in other US courts declining to apply the statute extraterritorially. It remains to be seen whether the expansive approach in Sergeeva will be followed. Again, for now, the issue remains geographically sensitive. Local advice (depending on the location of the US based target) will be essential in considering the feasibility of using section 1782 to acquire documents located beyond US borders.

Discretionary factors

Once the above statutory requirements are met, the District Court still retains a broad discretion as to whether to grant a 1782 order, and to what extent. In the leading US authority on section 1782, Intel v Advanced Micro Devices, the US Supreme Court identified four factors to guide the exercise of this discretion (none of which are strict prerequisites or individually determinative):

  • Whether the evidence is accessible by other means. In particular, the US court will consider whether the foreign court would have power to order production of the material, which may depend on whether or not the target of the application is a party to the proceedings. However, the existence or absence of such a power in the foreign court will not necessarily be determinative.
  • Whether the request is unduly intrusive or burdensome.
  • The nature of the foreign tribunal and proceedings and its likely receptivity to US judicial assistance.
  • Whether the request can be seen as an attempt to circumvent policies of a foreign country or the US.

The last two issues overlap to some extent. The “receptivity” inquiry is: would the foreign tribunal reject the evidence if it was provided under section 1782? Applicants enjoy a presumption of receptivity, and the contrary must be demonstrated by “authoritative proof”. The fact that the material sought would not be discoverable under the foreign tribunal’s own rules will not generally, on its own, be a reason to refuse a section 1782 order. However, the US court will be concerned not to be in a position of effectively second-guessing a foreign tribunal’s ruling or of undermining its authority to control its own proceedings. Examples of where courts have found that making a section 1782 order would cross that line, and have refused to do so, include cases where the applicant had effectively side-stepped the foreign tribunal’s procedures (by making a direct application when the relevant rules provided for evidence gathering requests to be routed via the tribunal) and where the application was made at a late stage in the proceedings in what the US court regarded as a clear attempt to circumvent the foreign court’s control.

How the above discretionary factors would be applied by the relevant US district court in any particular case will, of course, be a matter for local counsel’s input. However, it is also important to bear in mind that, even if the US court can be persuaded (or is prepared to presume) that the foreign court would not reject the evidence obtained under section 1782, and that the application is not seeking to circumvent any relevant policy in the foreign jurisdiction, that is no guarantee that the foreign court will not in fact object to the use of the process or refuse to admit the evidence.

A party contemplating a section 1782 application should therefore be aware that it may need to justify the use of the procedure in both the US and the foreign forum.

English courts’ attitude to section 1782

The English courts’ attitude to the use of section 1782 in support of English proceedings can be broadly categorised as one of the acceptance and support.

The leading authority is the House of Lords decision in South Carolina Co v Assurantie N V. The House of Lords rejected a finding by the Court of Appeal that use of the procedure was inherently objectionable and abusive because it interfered with the court’s control of its own procedure. The House of Lords noted that, under English civil procedure, the courts do not generally concern themselves with the manner in which the parties choose to obtain the evidence to support their case, provided that there is no question of illegality. Use of the section 1782 procedure could not therefore be said to inherently trespass on the court’s powers. Accordingly, as a general principle, it is open to a litigant in English proceedings to choose to make use of the procedure, if it is able to do so.

That approach has been applied in a number of subsequent English decisions. The US courts have themselves noted the South Carolina decision as an example of the kind of “authoritative guidance” to which US courts may have regard when assessing whether section 1782 would be welcomed by a particular foreign court.

While there have been a handful of occasions where the English courts have baulked at the use of the section 1782, it has not been because of any hostility to the use of the procedure per se. Rather, it has been because the application was pursued in a manner that was considered disruptive to the conduct of the English proceedings, to the point of being abusive or oppressive. Probably the most notable case in the UK, where the courts objected to the use of the procedure, is Bankers Trust International v PT Dharmala Sakti Sejahtera. In that case, the court restrained a party from enforcing a section 1782 order it had obtained from the US courts, and from proceeding with further applications.

However, Mance J’s finding that the use of the procedure was abusive and oppressive is perhaps unsurprising given the circumstances in that case:

  • The section 1782 orders had been sought and obtained ex parte during the period while judgment was reserved (with a view to a possible post-trial application to amend).
  • Many of the categories of documents sought had already been the subject of unsuccessful disclosure applications in the English proceedings.
  • The judge considered the further evidence-gathering exercise as speculative, with the potential to blow out into a large scale investigation.

The court was not prepared to allow such an exercise to derail conclusion of the proceedings, noting that “there must be some end to litigation”.

In summary, the section 1782 procedure is a potentially valuable evidence gathering tool where there is relevant evidence held by US entities. In any particular case, it will be important to take local US advice on the relevant US court’s likely attitude to the application and also to consider how to minimise the potential for any complaint to the English court that the use of the section 1782 procedure will undermine or be unacceptably disruptive to the English proceedings. Although each case will depend on the particular circumstances, this will probably mean bringing any section 1782 application at the earliest possible stage of the English proceedings in most cases. It may also warrant prior notice of the application being given to the opposing party and the court, unless there are good reasons not to do so (such as where the evidence is required in support of a freezing application).

Herbert Smith Freehills Jan O’Neill

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