Analysis

New Grounds for Foreign Banks to Resist Compliance With Third-Party Subpoenas

The scope of non-party discovery obligations to which a New York branch bank remains subject are unclear, and this uncertainty points to actions the branches can take to minimize the exposure of their parents.

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Banks in New York are routinely served with subpoenas seeking information and documents for use in other parties’ disputes. Where the banks are branches of foreign entities, and the subpoenas seek confidential depositor or client information held outside the United States, the consequence can be more than just expense and distraction, but legal and reputational risk as well. Disclosure potentially would involve breaches of confidentiality agreements and even foreign blocking statutes, and may suggest claims to eager plaintiffs that the banks themselves had participated in illegal activities. The grounds on which third-party recipients of the subpoenas can fight compliance are unsettled, but a recent decision by a U.S. District Court in the Southern District of New York provides significant support for aggressive efforts to resist disclosure. Still, the scope of non-party discovery obligations to which a New York branch bank remains subject are unclear, and this uncertainty points to actions the branches can take to minimize the exposure of their parents.

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