Knowledge is power. In civil litigation, knowledge about your adversary is gained through discovery. During the civil discovery process, each side learns about the strengths and weaknesses of the opponent’s case, such as the use of depositions and the ability to obtain documents relating to the dispute. These discovery mechanisms typically can be triggered only once litigation has been initiated. In the ordinary course of business, companies cannot demand a competitor’s data or e-mails, nor can it force depositions under oath of another company’s key employees.
However, there is a potentially significant exception to this rule. Under federal law, a person or company that might be involved in a proceeding outside of the United States may obtain formal discovery here, even without any litigation having been initiated in the United States or elsewhere. This can be a powerful weapon in obtaining knowledge (and gaining leverage) even before a formal dispute mechanism is triggered. Inside counsel whose organizations have operations outside of the United States, or who deal with foreign entities, should be aware of this significant legal device.
The authority is found in federal statute. 28 U.S.C. § 1782 provides as follows:
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.
The precursor to this law was passed before the Civil War. Then, the process was formal. It required a letter rogatory to be passed through diplomatic channels to the U.S. courts. Discovery could be had only in aid of an actual proceeding abroad, and a foreign government had to be a party or have an interest in that ongoing proceeding. The statute has been amended over time. In 1964, the present version was adopted. Today, an actual proceeding abroad is not required. Nor does a foreign government need to be a party or have an interest in the potential proceeding.
Today, any “interested person” can seek an order in United States federal court to obtain the testimony or documents of a person or corporation so long as the applicant can show that the discovery sought is for use in a proceeding in a foreign or international tribunal.
In Intel Corp. v. Advanced Micro Devices, Inc., the Supreme Court read the statute to “plainly reach” beyond the universe of persons designated “litigant.” And it held that the statute “does not limit the provision of judicial assistance to ‘pending’ adjudicative proceedings.” It held that even investigations being conducted outside of the United States could provide a basis for formal discovery within the United States.
But the Supreme Court limited when the statute can be invoked. It suggested, for example, that discovery might only be available as against a “nonparticipant in the matter arising abroad.” This means that two multinational corporations investigating potential claims against each other outside of the United States should not be able to use that fact alone to obtain discovery within the United States of their domestic affiliates absent unusual circumstances.
The limitations and scope of reach of this statute continue to be debated and tested in court. In many jurisdictions, judges are given a wide measure of discretion in deciding whether to allow this type of discovery.
One thing is clear: this statute provides a potentially critical mechanism for corporations that are prosecuting or defending claims in foreign tribunals. But it also has been tested as a means of seeking discovery prior to the initiation of proceedings outside of the United States. Given the extent of international commerce today, this once little-known provision of federal law can play a critical role.