On 1 March 2023 the English Court of Appeal (Civil Division) upheld the obtaining of evidence through a US court for use in English civil proceedings.[1] Under US federal statute USC §1782, a person is able to apply to a US District Court requiring a person located in the US to provide evidence or to produce a document by way of discovery for use in proceedings in other countries. This is known as a “s.1782 application”.
USC §1782 Applications
Under a s.1782 application the applicant needs to show four things, namely that it is an “interested person” in a foreign proceeding[2], the evidence being sought is the “testimony or statement” of a person or the production of “a document or thing”, the proceeding is before a foreign or international tribunal, and the person from whom the evidence is sought is in the district of the court where the application has been filed. The statute also specifies that s.1782 applications can be made in relation to all proceedings, civil and criminal, including an investigation before formal accusation.[3]
For many years, the US courts had disagreed on the reach of s.1782 applications until the law was clarified by the Supreme Court in the 2004 case Intel Corp. v Advanced Micro Devices, Inc (“Intel Corp”).[4]In this case it was held that a s.1782 application can be made by any interested person, an application may sometimes be made prior to the initiation of formal proceedings outside the US, and a “tribunal” means any tribunal that acts as a “first instance decisionmaker”. The Supreme Court also rejected the requirement that the discovery sought be discoverable in the foreign proceeding, noting that the “foreign tribunal can place conditions on its acceptance of the information to maintain whatever measure of parity it concludes is appropriate”.
Court of Appeal Case Facts
In 2022 Walter Tzvi Soriano sued two US-based defendants, Forensic News LLC and Scott Stedman, for libel in relation to eight online publications. The publications alleged that Mr Soriano was guilty of various offences, including money laundering and corrupt dealings with Russia in connection with security at Sochi Airport at the time of the 2014 Olympics and with the Israeli President Benjamin Netanyahu, amongst other matters. The defendants originally contested the jurisdiction of the English Court but this failed.
In the lead up to the preliminary hearing for the case, the defendants made a s.1782 application to the District Court for the Southern District of New York (“DCSDNY”) for an order requiring HSBC Bank USA NA to produce two broad categories of banking documents relating to Mr Soriano’s companies.
The defendants are relying on the substantive defences of truth and public interest, claiming that there are reasonable grounds to investigate whether Mr Soriano or his companies were involved in any corrupt payments, which they argued the material sought from HSBC Bank USA NA would show. In response, Mr Soriano sought an anti-suit injunction in respect of the s.1782 application in England on the grounds that it was “vexatious, oppressive and unconscionable and would interfere with the efficient conduct of these proceedings”. He also sought to intervene before the DCSDNY in the granting of the s.1782 application.
On 9 February 2023 Murray J in the High Court dismissed the application for an anti-suit injunction, finding that the defendants were not guilty of “conduct which [was] oppressive or vexatious or which [interfered] with the due process of the court”. Mr Soriano subsequently applied for permission to appeal the judge’s refusal to injunct the s.1782 application.
Court of Appeal Conclusions
In considering the current appeal, the Court of Appeal determined that Murray J had considered all of the relevant facts before concluding that the application was not abusive, unconscionable or vexatious. Whether it will be abusive to bring s.1782 proceedings will usually depend on the circumstances or the purpose for which the application is being brought.
This is not to say that the English Courts will never step in to prevent the use of a s.1782 application. In the case of Bankers Trust International Plc v PT Dharmala Sakti Sejahtera[5] the judge took into account all of the circumstances, including the fact that costs couldn’t be recovered in the New York court, the speculative nature of the proposed large-scale investigation to which the application related, and the fact that the English trial had already concluded, meaning that if any new material was found the case would have to be reopened.
In Omega Group Holdings Ltd v Kozeny[6] the defendant was injuncted from using a s.1782 application to depose the claimant’s employee witnesses in the US, on the ground that the witnesses would be subjected to “unwarranted double cross-examination” in the English trial.
In considering these two cases the Court of Appeal stated that they “demonstrate the factual nature of the evaluation that the English court will undertake on an application such as this”.
The Court of Appeal also considered the breadth of the current s.1782 application, commenting that it is far broader than any third-party disclosure order that an English court would make. However, it noted that the permissible breadth of an application is a matter primarily for the US District Court. The Court of Appeal referenced Intel Corp wherethe US Supreme Court acknowledged that the s.1782 procedure was to assist a foreign court. More specifically, “a district court could consider whether the §1782(a) request conceals an attempt to circumvent foreign proof-gathering restrictions”, that “unduly intrusive or burdensome requests may be rejected or trimmed”, and that the District Court can consider “appropriate measures, if needed, to protect the confidentiality of materials”. The Court of Appeal stated unequivocally that the DCSDNY “is well capable in this case of deciding whether to make and order and, if so, the appropriate scope of that order”.
Comment
Although the judgment arises from a defamation case, this clear and concise judgment is equally applicable to all litigation cases in England and Wales. The Court of Appeal has unequivocally confirmed the legitimacy of using a s.1782 application to obtain material from the US for use in English proceedings, and that English courts are receptive to the US federal court judicial assistance that is provided. It is apparent that English courts will be reluctant to interfere with a US court’s jurisdiction in granting a s.1782 application and will only do so where the granting of such an application would be clearly abusive, vexatious or unconscionably interfere with the English proceedings.
We are yet to see the use of s.1782 applications in criminal proceedings but, in the case of a public prosecution, this is likely due to law enforcement relying on other avenues to obtain evidence, such as Mutual Legal Assistance (“MLA”). However, given the delays that can be experienced under the MLA framework, and the fact that s.1782 applications are able to be heard ex parte, they are likely to become an important tool for cases where evidence is held in the US. Certainly, in the case of a private prosecution, the availability of a s.1782 application, where relevant evidence is held in the US, adds to the range of investigative tools open to a private prosecutor here. The principle referred to in the judgment of Murray J[7] that, provided the evidence was relevant, a party “should otherwise be free to gather evidence in any other way that is legitimately available to it” applies equally to the gathering of evidence for criminal proceedings. It is only where the evidence is irrelevant or it would be unfair to admit it that the English criminal courts will exclude it. There are plenty of examples of evidence obtained by way of a Norwich Pharmacal application being used in a private prosecution and we may well see USC §1782 being used in a similar way.
By Georgina Diamanti
[1] Soriano v Forensic News LLC & Ors [2023] EWCA Civ 223
[2] The definition of “interested person” also includes a foreign or international tribunal.
[3] 28 USC §1782(a)
[4] 542 U.S. 241, 124, S. Ct. 2466 (2004)
[5] [2002] CLC 132
[6] [1996] CLC 252
[7] Para [18i]
