Co-Authored by Hermann Knott1

It is no secret that the United States permits far broader pre-trial discovery than most - possibly all -- other countries. Broad discovery has plusses and minuses. On the upside, it can lead to a high quality of justice. Both sides are able to ascertain the facts and evaluate the strengths and weaknesses of each side's position. If the case does go to trial, most if not all of the truth is likely to come out. But the downside is that this comes at a substantial price. Not only is discovery expensive, it also can be intrusive. Clients have to open their files and, quite often, subject themselves to pre-trial depositions.

Civil law countries operate very differently. Typically, there is no general pre-trial discovery, and any request that the court compel production of a document must be for a specific, and specifically described, document. So when litigants from civil law countries encounter American document production or deposition requirements, the shock can be severe.

In recent years, American discovery has been playing an increasing role in disputes in other countries. An American statute authorizes United States courts to permit taking discovery in the United States for use in proceedings in other countries or in international tribunals. Under 28 USC

§ 1782, a person with an interest in a proceeding overseas can make its own request to an American district court for leave to obtain evidence in the United States. Section 1782 permits an applicant to request documents or testimony, or both.2

For civil law litigants, the availability of discovery under 28 USC § 1782 can be an attractive avenue. German law, for example, does not contemplate pre-trial depositions. Witnesses testify only at trial. It is true that pretrial proceedings may feature references to anticipated testimony, but there are no advance examinations. Even the use of affidavits is very rare. Nor do parties request and exchange documents. The Court may direct a person to provide a specific document that a party has identified in detail, and which the Court believes may be useful in arriving at a decision. But there is no provision for requiring production of categories of documents. Parties develop evidence on their own.

Assuming the jurisdictional requirements are met for invoking § 1782, discovery may be available from third parties; from affiliates of the counterparty; or in some cases, even from the other party. Documents might be sought from files kept in the United States and, under recent case law, sometimes from outside the United States as well. And because even other common law countries have less expansive discovery rules than the United States, § 1782 may be of interest to litigants in common law jurisdictions as well.

So § 1782 is potentially a very powerful tool - so much so that in recent years, as the world economy globalizes and international trade continues to grow, the volume of applications under

§ 1782 has mushroomed. Given how powerful § 1782 can be, this development should not surprise anyone. But it still remains the case that non-American legal systems are different enough from the American that new issues under § 1782 continue to arise in American courts.

One issue that has gained increasing focus is pre-litigation discovery. The case law under

§ 1782 holds that a person may seek evidence under § 1782 even if no actual proceeding abroad had been filed yet. But this can be done only if a decisional proceeding is within "reasonable contemplation."3 It's hard to know exactly what that means.

This issue takes on special importance in civil law countries, where procedural rules often require that the document initiating a lawsuit also include with it at least some of the evidence the plaintiff relies on. Sometimes a plaintiff may have a valid claim, but to support that claim, will need a document it doesn't have. So § 1782 may be an option in that situation, but only if the lawsuit is "within reasonable contemplation."

This article looks at pre-litigation discovery under § 1782. We begin with the basics of § 1782: what an applicant needs to show, and pointers for things to think about when making an application. The main focus, though, will be on how § 1782 can be used when a lawsuit outside the US has not yet been filed. How far down the road to an actual lawsuit does a dispute have to be before an American court will be satisfied that litigation is within reasonable contemplation?

Click here to continue reading . . .

Footnotes

1. Stuart M. Riback is a Partner at Wilk Auslander LLP in New York. A business litigator with more than 35 years of experience, he has handled a wide range of complex commercial, securities, intellectual property and creditors' rights disputes. Stuart writes and lectures extensively about cross-border disputes, contractual clauses, arbitration, corporate privilege and work product issues, and litigation strategy. Stuart is Chair of the Business and Corporate Litigation Committee in the ABA Business Law Section.

Hermann Knott is a member of the German and New York Bars, with longstanding experience in transactional and matters related to cross-border disputes. He is based in Cologne, Germany, and in addition to his client work a frequent speaker and writer on issues related to the afore-mentioned issues. Hermann is also a Fellow of the Chartered Institute of Arbitrators and of the Hong Kong Institute of Arbitrators. He is a partner at Kunz in Cologne, Germany.

2. If only documents are sought, the process usually takes up to six to eight months, because there has to be a court decision and then time for the documents to be produced. The process typically takes longer when the application seeks testimony in addition to documents, because the process typically goes in stages: first documents are produced and then, after the applicant takes some time to review the documents, the oral examination proceeds.

3. Intel Corp. v. Advanced Micro Devices, Inc., 542 U.S. 241, 259 (2004).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.