Smart Strategies for International Discovery
Multinational companies involved in litigation frequently find themselves seeking documents or information located in another country. The requesting party may, for example, be seeking documents that are held by the company (or an affiliate) outside the United States. Or the requesting party may want to depose an employee who works in another country. In any such case, the company should have a clear understanding of its rights and obligations before agreeing (or not agreeing) to provide the requested discovery.
Obtaining Documents Located Outside the U.S.
Parties (typically plaintiffs) frequently argue that a multinational company has relevant documents outside the U.S. These documents are typically held by a corporate subsidiary or affiliate. That fact, however, is not dispositive. Many courts have held that a company is obligated to produce documents even when they are held by a foreign entity. The important question is whether those documents are within the company’s “possession, custody, or control.” If so, the company will likely be obligated to obtain and produce them.
To decide this issue, courts consider a variety of factors, including whether the defendant has the “practical ability” to obtain the documents. For example, if the company demanded the documents from the foreign subsidiary for its own purposes, would it be able to obtain them? Generally speaking, courts will conclude that a company has the ability to obtain documents from a wholly owned subsidiary. Whether the company has the same ability to obtain documents from an affiliate in which the company is merely a shareholder is less certain. Regardless of the specific situation, however, the company should analyze the relevant law in the jurisdiction and evaluate whether it can argue that documents held outside the U.S. are within its possession, custody, or control.
Depending on where the documents are located, there may also be local laws that affect the company’s ability to produce them. U.S. pre-trial document discovery is much broader than what is available in most countries, and many countries have enacted laws commonly referred to as “blocking statutes.” Such laws may address the production of documents in general or certain types of documents in particular, and may carry significant penalties. Thus, it is important to consult with counsel to determine whether such laws exist or apply to a particular situation. Importantly, courts in the United States (including the U.S. Supreme Court) have held that such statutes do not affect a party’s obligation to produce documents in U.S. litigation (although they may be relevant to a court’s determination as to whether a party should be sanctioned for failing to comply with its discovery obligations).
Obtaining Documents Located in the U.S. for Foreign Litigation
Companies may also want to obtain documents located within the U.S. to help with litigation taking place outside the country. In such instances, the company should check with foreign counsel for any local rules concerning what discovery can be obtained or used in the foreign forum. However, assuming nothing in the foreign court prevents the discovery, U.S. federal law provides a process by which a foreign litigant can obtain discovery in the U.S.
28 USC § 1782 allows a party in a foreign litigation to seek an order from a U.S. district court compelling a person or company within the United States to provide documents or deposition testimony for use in the foreign proceeding. This process generally works in one of two ways. First, the foreign tribunal (usually a court) can issue a “letter rogatory” to a district court requesting assistance in compelling the discovery. A party or any other “interested person” can also make an application, without a letter rogatory, directly to the district court. The request must generally explain what discovery is being sought, why § 1782’s requirements have been satisfied, and why the district court should exercise its discretion to compel the discovery.
These requests are generally narrow, and are not supposed to be used as a “fishing expedition” for broad, open-ended discovery. Thus, in considering the application, the district court is supposed to consider factors such as, among other things, whether (i) the foreign tribunal has jurisdiction to order production of the requested documents or testimony; (ii) the application is an attempt to avoid discovery restrictions in the foreign jurisdiction; and (iii) the application is unduly intrusive or burdensome. Whether to grant the motion is ultimately in the district court’s discretion.
Obtaining Deposition of a Foreign Witness
Finally, a party in U.S. litigation may want to depose a witness located outside the country. If an adverse party employs the witness, then the court has jurisdiction to order that party to produce the witness—and can sanction the party if it refuses. A party, however, may want to depose an individual who is not employed by an adverse party. Even if the witness is employed by a subsidiary or affiliate, the company still may not have the power to compel the witness to attend a deposition. Since the witness is outside the U.S., a regular subpoena cannot be used to secure his or her appearance at a deposition.
Under 28 USC § 1783, a federal court may, under certain circumstances, issue a subpoena requiring the appearance of a U.S. citizen or resident who is in foreign country. The request for the subpoena must be “in the interests of justice,” and the court must find that it is not otherwise possible to obtain the witness’ testimony in an admissible form. The witness must receive notice and an opportunity to challenge the application.
Additionally, the party serving the subpoena must pay the witness’ necessary travel and attendance expenses, which will set by the court.
If the witness is not a U.S. citizen or resident, however, then the district court cannot issue a subpoena compelling appearance. Rather, the party seeking the deposition must rely on international treaties, such as the Hague Convention on the Taking of Evidence Abroad in Civil or Commercial Matters. There are downsides to using this process. Not all countries have signed onto the Hague Convention, some signatories do not allow depositions at all (or place significant restrictions on them), and it is typically a slow process.
A company faced with a request for international discovery should consider several factors. First, if foreign documents are requested, the company should consider whether it has “possession, custody, or control.” If it does not, it should assert that objection and attempt to meet and confer with the requesting party. If the company’s position is not strong, it may be better off negotiating a narrow request that will allow the company to provide targeted documents. That will save on costs that the company will incur litigating the issue, as well as potentially significant search and review expenses (particularly if electronic documents are involved). The company, however, should be sure to evaluate whether any foreign laws affect its ability to produce documents.
Second, a company faced with a § 1782 application should consider whether the application is trying to fish for documents that are outside the permissible scope of discovery, or limitations that have otherwise been set, in the foreign jurisdiction. Additionally, while not dispositive, evidence that the foreign tribunal does not believe that § 1782 assistance is necessary to obtain the requested discovery will be helpful in resisting the application.
Finally, if the company is trying to resist producing a witness located outside the U.S. for a deposition, it should consider whether the witness is a U.S. citizen, and also whether the company employs that witness. If the foreign witness is not a U.S. citizen, it will be more difficult to compel the witness individually to appear for a deposition (if it can be done at all). If the witness, however, is an employee, the court likely has the power to compel the company to make the witness available at a deposition. The company can refuse to do so, but the requesting party can argue that the company has failed to comply with its discovery obligations.
Kevin F. Meade is a senior associate in the litigation department at Weil, Gotshal & Manges in New York. He focuses on representing and advising clients in a broad variety of industries on complex commercial disputes and can be reached at firstname.lastname@example.org.