Amicus Curiae Brief — Société Nationale Industrielle Aérospatiale v. United States District Court

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OcTOBER TERM, 1986

SOCIETE NATIONALE INDUSTRIELLE AEROSPATIALE AND

SociETE.DE CONSTRUCTION D’AVIONS DE TOURISM,

PETITIONERS

v.

UNITED STATES DISTRICT COURT FOR

THE SOUTHERN DISTRICT OF IOWA

(DENNIS JONES, JOHN AND ROSA GEORGE,

REAL PARTIES IN INTEREST)

ON WRIT OF CERTIORARI TO THE UNITED STATES

COURT OF APPEALS FOR THE EIGHTH CIRCUIT

BRIEF FOR THE UNITED STATES AND THE

SECURITIES AND EXCHANGE COMMISSION

AS AMICI CURIAE

CHARLES FRIED

Solicitor General

RICHARD K. WILLARD

Assistant Attorney General

ALBERT G, LAUBER, JR.

Deputy Solicitor General

JAMES M. SPEARS

Deputy Assistant Attorney General

JEFFREY P. MINBAR

Assistant to the Soliciter General

DAVID EPSTEIN

Davip M: SCHLITZ

Attorneys /

Department of Justice

ABRAHAM D. SOFAER Washington, D.C. 20530

Legal Adviser (202) 683-2217

Department of State

Washington, D.C. 20520

DANIEL L. GOBLZER

General Counsel

Securities and Exchange Commission

Washington, D.C. 20549

i =

~? 3 :

QUESTION PRESENTED

Whether a federal district court, adjudicating a pri-

vate civil suit against a foreign national subject to the

court’s jurisdiction, should employ the procedures set

forth in the Hague Evidence Convention for discovery of

documents and information within the possession of the

foreign national but located abroad.

TABLE OF CONTENTS

Page

LC 1

RTE gh LE ALE ES OS SORES Oe ee 2

nr UII... li cectstentnentenliiciiieahtenitigtatentbnsenes 6

Argument:

The court of appeals erred in concluding that the

Hague Evidence Convention has no application to

the discovery requests at issue here, and the case

should be remanded for a determination whether

resort to the Convention should be required pur-

suant to a particularized comity analysis ............... 7

A. Comity does not require first use of the Hague

Convention in every case where a foreign liti-

gant objects to American discovery procedures.. 11

B. The decision below should be vacated and the

case should be remanded for the application of

@ proper comity analysis ......................--..-...--..-. 19

A A ee 30

TABLE OF AUTHORITIES

Cases:

Adidas (Canada) Ltd. v. S.S. Seatrain Bennington,

No. 80 Civ. 1922 (S.D.N.Y. May 30, 1984).......... 25

Anderson v. Liberty Lobby, Inc., No. 84-1602

PRET ETE A a 20

Anschuetz & Co., GmbH., In re, 754 F.2d 602, pe-

tition for cert. filed, No. 85-98 ............ asseeedy By 9, 26, 29

Banco Nacional v. Sabbatino, 376 U.S. 398 ............ 13

California Motor Transport Co. v. Trucking Un-

TE ee ee 21

Club Mediterranee, S.A. Vv. Dorin, appeal dis-

missed and cert. denied, 469 U.S. 913 —.............. 2

Compagnie Francaise D’Assurance Pour Le Com-

merce Exterieur v. Phillips Petroleum Co., 105

i (EE TT ee Fe

(III)

IV

Cases—Continued : Page

Cooper Industries, Inc. v. British Aerospace, Inc.,

I alienate 9,14

Disconto Gesellschaft v. Umbreit, 208 U.S. 570.... 13

Evidence (Proceedings in Other Jurisdictions)

Act 1975 (Guernsey), In re, Order 1980 (Stat.

ee Te BI, TT cichanctiiacetintanddideinatebabniubiaiianiiaians 17

Evidence (Proceedings in Other Jurisdictions)

Act 1975, In re (Q.B. Feb. 28, 1984), reprinted

in 23 Int’] Legal Materials 511 (1984) -.............. 16

Federal Maritime Commission v. DeSmedt, 366

F.2d 464, cert. denied, 385 U.S. 974 ..................... 8

First National City Bank v. Banco Para el Comer-

F&O, RULE RAG er weet oe 13

Gebr. Eickhoff Maschinenfabrik U nd Eisengieberei

mbH v. Starcher, 328 S.E.2d 492 ....................... 9,14, 18

Graco, Inc. vy. Kremlin, Inc., 101 F.R.D. 508......9, 14, 25

Herbert v. Lando, 441 U.S. 158 .......................... 19, 22, 29

Hickman v. Taylor, 329 U.S. 496 ............................. 19, 22

Hilton v. Guyot, 159 U.S. 118 ............................. 11, 12, 13

Insurance Corp. of Ireland, Ltd. v. Compagnie des

Bauzites de Guinee, 456 U.S. 694 —........0000......... 8,19

International Society for Krishna Consciousness,

I AS EEE 9,14, 18

Laker Airways, Ltd. v. Pan American World Air-

I Fie I CI ethntiericeineienticiienatindaabiccnnnness 9,14

Laker Airways, Ltd. v. Sabena, Belgian World

Po Se TE EE RES 11, 13

Lowrance Vv. Weinig, 107 F.R.D. 386 ...................... 9,14

Marc Rich & Co., A.G., In re, 707 F.2d 663, cert.

I a hrerletihichiitttneetiiirnditintailiicbenecen x

Messerschmitt Bolkow Blohm, GmbH. v. Walker,

757 F.2d 729, petition for cert. pending, No.

I cctithiicdecadiovabianintbitliiciiiicinticitiihitaliieliitantimnasl 2,9, 14

Mitsubishi Motors Corp. v. Solem Chrysler-

Plymouth, Inc., No. 83-1569 (July 2, 1985) ........ 21

NAACP v. Button, 371 U.S. 415.220.0000. 21

Pain v. United Technologies Corp., 637 F.2d 775

cert. denied, 454 U.S. 1128 ........................... ee 18, 22

Perkins v. Benguet Consolidated Mining Co., 342

Cases—Continued : Page

Philadelphia Gear Corp. v. American Pfauter

ER Eee en 14

Pierburg GmbH & Co. KG v. Superior Court, 137

Cal. App. 3d 238, 186 Cal. Rptr. 876 ................. 9,14

Saul v. His Creditors, 5 Mart. (n.s.) 569

SEC v. Banca della Svizzera Italiana, No. 81 Civ.

1836 (S.D.N.Y. filed Mar. 29, 1981) .................. 17

SEC vy. Certain Unknown Purchasers of the Com-

mon Stock of, and Call Options for the Common

Stock of, Santa Fe International Corp., No. 81

Civ. 6553 (S.D.N.Y. filed Oct. 26, 1981) .............. 16

SEC v. Minas de Artemisa, S.A., 105 F.2d 215........ 8

SEC v. Tome, [Current] Fed. Sec. L. Rep. (CCH)

hf 8} REE 17

Schlagenhauf v. Holder, 379 U.S. 104 .................... 20

Seattle Times Co. v. Rhinehart, 467 U.S. 20........ 15, 19, 21,

22, 29-30

Slauenwhite v. Bekum Maschinenfabriken, GmbH,

I a ions 9,14

Societe Internationale v. Rogers, 357 U.S. 197.... 8, 11,

13, 19

Societe National Industrielle Aerospatiale v. U.S.

District Court, 788 F.2d 1408 .......................-....... 9,14

Statement on the Examination of Witnesses as

Requested by a Foreign Letter Rogatory (Pret.

ee 17

Testimony of Constandi Nasser, In re, Trib.

Admin. de Paris, 6eme section—2eme chambre,

No. 51&46/6 (Dec. 17, 1985) .............................--. 16

TH. Goldschmidt A.G. v. Smith, 676 S.W.2d 448.... 14

United States v. First National Bank, 699 F.2d

a 11

United States v. First National City Bank, 396

I enna 8, 13, 21

United States v. Vetco, Inc., 691 F.2d 1281, cert.

a 11

Uranium Antitrust Litigation, In re, 480 F. Supp.

ESE ENS Nach STR te ete ea 9

Vincent v. Ateliers de la Motobecane S.A., 193

N.J. Super. 716, 475 A.2d 686

VI

Cases—Continued : Page

Voikswagenwerk A.G. Vv. Falzon, appeal dismissed,

SE EE. CII ncrinenenpsittecintinntndeenatitimaiunincemibammnegee 2

Volkswagenwerk, A.G. v. Superior Court, 123 Cal.

App. 3d 840, 176 Cal. Rptr. 874 ..........................- 9

Work v. Bier, 106 F.R.D. 46 ...................--222-..---2000- 9, 14,18

Treaty, statutes and rules:

Hague Convention on the Taking of Evidence

Abroad in Civil and Commercial Matters,

opened for signature Mar. 18, 1970, 23 U.S.T.

ERS ET ee 1

Arts. 1-2, 23 U.S.T. 2557-2558 ............................. 3

Arts. 5-13, 23 U.S.T. 2560-2568 ........................... 3

a eeenmesinmcens 3

Arts. 15-16, 23 U.S.T. 2564-2565 ...................... o 3

I a ccepsineninnsttiomieniee 8

ane 15, 17, 27, 28

ee aan 2

a sceliliaeeaiieiadeniiin 19

Fed. R. Civ. P.:

le 28

see er eeeee eerer Seer ee 29

| TNE ee eae ae oS Oe TN 28

RES a ae ene eee ee 29

aici inchs iniatibiemiliinaainial sali 3

ESR Peres eee nee sen 5

Miscellaneous:

Borel & Boyd, Opportunities for and Obstacles

to Obtaining Evidence in France for Use in

Litigation in the United States, 13 Int'l Law.

IIR AES ER NOE aren sor alee er 27

Edwards, Taking of Evidence Abroad in Civil or

Commercial Matters, 18 Int’] & Comp. L. Q. 646

RPE SET RTE eee care er See

Fedders, Policing Internationalized U.S. Capital

Markets: Methods to Obtain Evidence Abroad,

ce 8 EEN ree 16

Heck, U.S. Misinterpretation of the Hague Evi-

dence Convention, 24 Colum. J. Transnat’] L.

A 2 en eee 9

Vil

Miscellaneous—Continued : Page

Herzog, The 1980 French Law on Documents and

Information, 75 Am. J. Int’] L. 382 (1981) ........ 24

Langbein, The German Advantage in Civil Proce-

dure, 52 U. Chi. L. Rev. 823 (1985).................... 30

Marcus, Myth and Reality in Protective Order

Litigation, 69 Corneil L. Rev. 1 (1983).............. 30

7 Martindale-Hubbell Law Directory (pt. VII)

RUT ie ccetaiasitcieasheiadieth ial odes eel helt ainda tclareaiihapmeitiitibiesinn 15, 27

4 J. Moore, Moore’s Federal Practice (2d ed.

eae a AN 19

Note, Strict Enforcement of Extraterritorial Dis-

covery, 38 Stan. L. Rev. 841 (1986) ........0000000.. 9, 25

Onkelinx, Conflict of International Jurisdiction:

Ordering the Production of Documents in Vio-

lation of the Law of the Situs, 64 Nw. U. L.

I eee 9

Oxman, The Choice Between Direct Discovery and

Other Means of Obtaining Evidence Abroad:

The Impact of the Hague Evidence Convention,

37 U. Miami L. Rev. 7383 (19838).......................... 15

Reese, The Hague Conference on Private Inter-

national Law: Some Observations, 19 Int'l

i 7

Report of United States Delegation to Eleventh

Session of Hague Conference on Private Inter-

national Law, 8 Int’l Legal Materials 785

REESE EN Sa e es 2 Ne on Ai Rie ee 8

Restatement (Revised) of Foreign Relations Law

of the United States (Tent. Draft No. 7, 1986).. 20

Restatement (Second) of Conflict of Laws (1971).. 21

Restatement (Second) of Foreign Relation Law

of the United States (1965)... ......B, 9, 20

S. Exec. A, 92d Cong., 2d Sess. (1972) ................... 7

S. Exec. Rep. 92-25, 92d Cong., 2d Sess. (1972)... 7,14

P. Schlosser, Der Justizkonflikt zwischen den

| a 24

Securities Exchange Act Release Nos. 9484, 9485,

[1921-1982] Fed. Sec. L. Rep. (CCH) { 98,323

I 16

Smit, International Aspects of Federal Civil Pro-

cedure, 61 Colum. L. Rev. (1961) ......................... 9

vilt

J. Story, Commentaries on the Conflicts of Law

eS ewes eee

Struve, Discovery from Foreign Parties in Civil

Cases before U.S. Courts, 16 N.Y.U. J. Int’l L.

3 S 2 ——_ ee ee

Toms, The French Response to the Extraterri-

torial Application of United States Antitrust

Laws, 15 Int’] Law. 585 (1981) .........................-..

8 C. Wright & A. Miller, Federal Practice and

Procedure, Cloth (1970) .........2....0cccccceccocccccsececeeeese-

—__—

Page

12

Iu the Supreme Court of the United States

OCTOBER TERM, 1986

No. 85-1695

SOCIETE NATIONALE INDUSTRIELLE AEROSPATIALE AND

SOCIETE DE CONSTRUCTION D’AVIONS DE TOURISM,

PETITIONERS

Vv.

UNITED STATES DISTRICT COURT FOR

THE SOUTHERN DISTRICT OF IOWA

(DENNIS JONES, JOHN AND ROSA GEORGE,

REAL PARTIES IN INTEREST )

ON WRIT OF CERTIORARI TO THE UNITED STATES

COURT OF APPEALS FOR THE EIGHTH CIRCUIT

BRIEF FOR THE UNITED STATES AND THE

SECURITIES AND EXCHANGE COMMISSION

AS AMICI CURIAE

INTEREST OF AMICI CURIAE

The United States is a party to the Hague Evidence

Convention * and has a strong interest in promoting inter-

national judicial cooperation consistent with domestic law.

The Securities and Exchange Commission, the agency

charged by Congress with the enforcement of the federal

securities laws, has in the past used the Convention’s

procedures in an effort to obtain evidence abroad and

1 Hague Convention on the Taking of Evidence Abroad in Civil

and Commercial Matters, opened for signature Mar. 18, 1970, 23

U.S.T. 2555 et seq. (entered into force between the United States

and France on Oct. 6, 1974), reprinted at Pet. App. 26a-41a.

(1)

2

thus has actual experience with the practical opera-

tion of its transnational discovery methods. This Court

on three previous occasions has invited the United States

to express its views on the question presented. See U.S.

Amicus Br., Anschuetz & Co. GmbH. v. Mississippi River

Bridge Authority, No. 85-98, and Messerschmitt Bolkow

Blohm, GmbH. v. Walker, No. 85-99, petitions for cert.

pending (U.S. Anschuetz Br.); U.S. Amicus Br., Club

Mediterranee, S.A. Vv. Dorin, appeal dismissed and cert.

denied, 469 U.S. 9138 (1984) (U.S. Club Med. Br.) ; U.S.

Amicus Br., Volkswagenwerk A.G. v. Falzon, appeal dis-

missed, 465 U.S. 1014 (1984) (U.S. Falzon Br.).

STATEMENT

Petitioners are aircraft-manufacturing corporations

organized under the laws of France and owned by the

government of that country (Pet. App. la). Although

petitioners construct their aircraft in France, they adver-

tise and sell them in the United States (ibid.). In 1980,

one of petitioners’ “short take-off and landing” aircraft

was involved in a plane crash in Iowa. Respondents Den-

nis Jones, John George, and Rosa George brought this

tort action against petitioners in the United States Dis-

trict Court for the Southern District of Iowa, alleging

that they suffered persunal injury as a result of defects

in the plane (ibid.).

Petitioners and respondents both sought discovery, and

discovery motions were referred by the parties’ consent

to a magistrate under 28 U.S.C. 636(c) (1). Respondents

filed an initial request for production of documents; this

request sought the flight manual, pilot’s handbook, per-

formance data and testing records of the airplane in-

volved in the crash (Pet. App. 12a; J.A. A19-A20). Peti-

tioners apparently complied with this initial discovery

request, and they in turn propounded interrogatories and

requested documents from respondents (Pet. App. 12a).

Respondents then filed a further request for production of

documents, as well as interrogatories and requests for

admissions (J.A. A21-A38). In that second round of dis-

: 3

covery, respondents sought inspection reports and design

specifications for the aircraft (J.A. A27-A29) ; requested

admissions that petitioners had made certain claims about

the aircraft in advertisements published in United States

magazines (J.A. A21-A26; A36-A38); and propounded

questions about the composition of those advertisements

(J.A. A80-A35).

Petitioners declined to comply with the second discovery

request and sought a protective order from the magistrate

(Pet. App. 12a; J.A. Al-All). They contended that the

responsive information and documents could properly be

produced only through the procedures set forth by the

Hague Evidence Convention.? Petitioners also argued

that production by means other than the Convention

would violate a French “blocking statute” prohibiting

transmittal of evidence for use in foreign judicial pro-

ceedings except as provided by international agreement

or French law (J.A. A9-A10).*

2The Hague Evidence Convention provides three alternative

methods for conducting evidence-taking proceedings abroad. Under

the first method, a litigant may request the court where the action

is pending to transmit a “Letter of Request” to the “Central Au-

thority” in the country where the evidence is located. See arts. 1-2,

23 U.S.T. 2557-2558. The Central Authority, selected by the foreign

government, then transmits the request to the appropriate foreign

court, which conducts the evidentiary proceeding. See arts. 5-18,

23 U.S.T. 2560-2563. The foreign court, upon request, will conduct

the evidentiary proceeding under procedures specified by the re-

questing court, unless those procedures are incompatible with

internal law or impracticable. See art. 9, 23 U.S.T. 2561. Under

the second method, the litigant may request that a diplomatic or

consular officer of the country where the action is pending take

evidence in the foreign country to which he is accredited. See arts.

15-16, 23 U.S.T. 2564-2565. Under the third method, the litigant

may request that a specially appointed commissioner take evidence

in the foreign country. See art. 17, 28 U.S.T. 2565. The three

methods are similar to those identified by Fed. R. Civ. F. 28(b).

* The French statute, enacted in 1980, provides (Pet. App. 47a-

48a):

Subject to treaties or international agreements and applicable

laws and regulations, it is prohibited for any party to request,

4

The magistrate denied petitioners’ motion and ordered

compliance with respondents’ discovery request (Pet. App.

lla-25a). The magistrate based his decision primarily

upon his “concern with the impediment to discovery which

the Hague Evidence Convention places on litigation in

American courts and the potential interference with such

proceedings which forcing compliance with foreign court

procedures would cause” (id. at 24a). In response to peti-

tioners’ claim that discovery would violate the French

blocking statute, the magistrate cited evidence that the

statute “ha[s] not been strictly enforced in France” and

noted that in any event “a party who is affected by the

law may seek a waiver of its provisions from the appro-

priate French minister” (id. at 22a). The magistrafe

pointed out that the discovery sought—production of

documents, responses to requests for admissions, and

answers to interrogatories—“does not have to take place

in France” and that the requested discovery was “not

greatly intrusive or abusive” (id. at 25a). He concluded

on balance that the “United States’ interests are stronger

than potential French interests” and ruled that resort to

the Hague Convention was not required (ibid.).

I ‘itioners sought review of the magistrate’s decision

through a petition to the court of appeals for a writ of

mandamus. Although the court of appeals agreed to con-

sider the merits of the petition, it declined to grant the

relief requested (Pet. App. la-10a). The court first con-

cluded that the Hague Convention’s procedures have no

application to the discovery in question, stating (id.

at 4a);

Although a minority of courts have adopted the

position advanced by the Petitioners, in our opinion

the better rule, which has been adopted by the vast

seek or disclose, in writing, orally or otherwise, economic, com-

mercial, industrial, financial or technical documents or infor-

mation leading to the constitution of evidence with a view to

foreign judicial or administrative proceedings or in connection

therewith.

5

majority of courts, is that when the district court

has jurisdiction over a foreign litigant the Hague

Convention does not apply to the production of evi-

dence in that litigant’s possession, even though the

documents and information sought may physically be

located within the territory of a foreign signatory

to the Convention.

The court specifically adopted the Fifth Circuit’s view

that “ ‘matters preparatory to compliance with discovery

orders in the United States, even where the preparatory

acts occur in foreign nations, do not constitute discovery

in the foreign nation as addressed by the Hague Conven-

tion’” (id. at 5a, quoting In re Anschuetz & Co., GmbH.,

754 F.2d 602, 611 (5th Cir. 1985), petition for cert. pend-

ing, No. 85-98). While holding that “the Hague Conven-

tion does not apply to the discovery sought in this case,”

the court suggested that the Convention “will continue to

provide useful, if not mandatory, procedures for dis-

covery abroad from foreign nonparties who are not sub-

ject to an American court’s jurisdiction and compulsory

powers” (Pet. App. 5a, 6a).

The court of appeals next considered whether the

French blocking statute provides an independent ground

for petitioners’ objections to compliance with the dis-

covery orders. The court agreed with the magistrate’s

balancing of the foreign and domestic interests, relying

(Pet. App. 9a) on factors set forth in Section 40 of the

Restatement of Foreign Relations Law of the United

States (1965). The court suggested that petitioners, as

corporations owned by the French government, “stand in

a most advantageous position” to obtain a waiver of the

blocking statute’s requirements, and the court opined that

petitioners’ good faith in seeking a waiver would be rele-

vant in the event the magistrate considered imposing

sanctions for noncompliance with the discovery order

(Pet. App. 10a) .*

* No question of sanctions under Fed. R. Civ. P. 37 is before this

Court at this time.

6

SUMMARY OF ARGUMENT

The court of appeals erred in holding that the Hague

Evidence Convention has no application in the present

ease. The Convention prescribes optional procedures,

preferred by most foreign litigants, for parties to obtain

discovery of documents and information located abroad.

An American court, faced with objections to traditional

American discovery methods on the ground that they

would violate a foreign nation’s law or clearly articulated

policies, should give serious consideration to use of the

Convention even though it has the power to require dis-

covery through the traditional means. Principles of inter-

national comity should guide a court’s decision whether

to use the Convention in any particular case.

Comity is a flexible principle and does not require ini-

tial resort to the Convention whenever a foreign litigant

objects to American discovery procedures. A rigid rule

mandating “first use” of the Convention in all cases finds

no support in the language or ratification history of the

Convention and would fail to respond to the inevitable

complexities of transnational discovery disputes. Rather,

the question whether to employ the Convention should be

based on a case-by-case comity analysis that takes into

account the facts and circumstances surrounding the par-

ticular discovery request and the foreign objections

thereto.

A proper comity analysis must begin with a reasoned

evaluation of the domestic and foreign interests. The

United States’ interest generally will center on its obliga-

tion to assure that domestic litigants are afforded ade-

quate opportunities to adjudicate their claims. Foreign

interests that may merit accommodation from United

States courts include such concerns as preservation of ter-

ritorial integrity, prevention of abusive evidence-gather-

ing, or policies safeguarding substantive liberty, prop-

erty, or privacy interests. In determining whether or not

to utilize the Convention, the court should consider

whether the Convention can provide fair, efficient, and

effective discovery, taking into account such factors as

7

whether the evidence can be obtained through the Con-

vention and the expense, burden, and delays that might

result from its use. The United States has a strong inter-

est in avoiding conflict with foreign nations, and Ameri-

can courts should thus be mindful of the need to refrain,

when feasible, from ordering discovery that would violate

a foreign nation’s laws or policies. Because the district

court is in the best position to apply a proper comity

analysis in the first instance, the decision should be

vacated and the case remanded for that purpose.

ARGUMENT

THE COURT OF APPEALS ERRED IN CONCLUDING

THAT THE HAGUE EVIDENCE CONVENTION HAS

NO APPLICATION TO THE DISCOVERY REQUESTS

AT ISSUE HERE, AND THE CASE SHOULD BE

REMANDED FOR A DETERMINATION WHETHER

RESORT TO THE CONVENTION SHOULD BE RE-

QUIRED PURSUANT TO A _ PARTICULARIZED

COMITY ANALYSIS

The Hague Evidence Convention prescribes procedures

by which litigants involved in civil and commercial trans-

national disputes may obtain evidence from abroad. The

Convention was formulated through the Hague Confer-

ence on Private International Law* and represents an

attempt to encourage evidence-gathering methods that

are both “ ‘tolerable’ in the State of execution and * * *

‘utilizable’ in the forum of the State of origin where the

action is pending.” S. Exec. A, 92d Cong., 2d Sess. 11

(1972). The Convention helps bridge the significant pro-

cedural obstacles encountered when litigants seek evi-

dence located in a foreign country that employs a differ-

ent legal system. See id. at VI; S. Exec. Rep. 92-95, 92d

Cong., 2d Sess. 1 (1972); Report of United States Dele-

5 The Hague Conference is an international organization that

promotes cooperation in the development of uniform rules of pri-

vate international law. See Reese, The Hague Conference on Pri-

vate International Law: Some Observations, 19 Int’l] Law. 881

(1985).

————- - — ee —— _ ee

gation to Eleventh Session of Hague Conference on Pri-

vate International Law, 8 Int’] Legal Materials 785, 806

(1969).

Although the Hague Evidence Convention is a sig-

nificant attempt to foster international judicial coopera-

tion, its proper interpretation has become the subject of

increasing litigation. Foreign defendants, who typically

oppose discovery in United States courts, have frequently

asserted that the Convention operates as the exclusive

and mandatory method by which domestic plaintiffs may

obtain discovery abroad. This appears to have been the

thrust of petitioners’ argument below (see Pet. App. 4a,

12a), although they hgve since retreated from that posi-

tion (see Pet. Reply Br. 5-6). Domestic plaintiffs, by

contrast, have objected to use of the Convention, main-

taining that it is an expensive and ineffective method for

conducting discovery. They have urged that the Conven-

tion has no application whatsoever when the foreign de-

fendant is subject to the jurisdiction of a United States

court and where production of the information will occur

in this country. This is the interpretation adopted by the

court of appeals below (Pet. App. 4a-7a).

In our view, both of these extreme interpretations are

incorrect. As we have previously explained at greater

length (see U.S. Anschuetz Br. 8-11; U.S. Club Med. Br.

8, 7-9; U.S. Falzon Br. 4-7), we think it clear that the

Convention provides optional, rather than exclusive,

methods for obtaining discovery from foreign parties.

As a general matter, United States courts have broad

authority to demand that foreign nationals subject to

their jurisdiction produce evidence located abroad.* The

© See, ¢.g., Insurance Corp. of Ireland, Ltd. v. Compagnie des

Bauzites de Guinee, 456 U.S. 694 (1982) ; Societe Internationale v.

Rogers, 357 U.S. 197, 204-206 (1958) ; In re Mare Rich & Co., AG..,

707 F.2d 663, 667 (2d Cir.), cert. denied, 463 U.S. 1215 (1983) ;

United States v. First National City Bank, 396 F.2d 897, 900-901

(2d Cir. 1968); Federal Maritime Commission v. DeSmedt, 366

F.2d 464, 468-469 (2d Cir.), cert. denied, 385 U.S. 974 (1966) ;

SEC v. Minas de Artemisa S.A., 150 F.2d 215, 217 (9th Cir. 1945) ;

9

Hague Evidence Convention influences, but does not con-

trol, the exercise of that power. The Convention’s lan-

guage, history, and purposes alike indicate that it was

not intended to prescribe the exclusive means by which

American plaintiffs might obtain foreign evidence (see

U.S. Anschuetz Br. 8-11). American courts are virtually

unanimous in concluding that the Convention’s proce-

dures are not exclusive.’

Equally erroneous in our view is the court of appeals’

conclusion, at the opposite extreme, that “when the dis-

International Society for Krishna Consciousness, Inc. v. Lee, 105

F.R.D. 435, 441 (S.D.N.Y. 1984) ; In re Uranium Antitrust Litiga-

tion, 480 F. Supp. 1138, 1144-1145 (N.D. Ill. 1979); Volkswagen-

werk, A.G. v. Superior Court, 123 Cal. App. 3d 840, 856-857, 176

Cal. Rptr. 874, 883-884 (1981). See also Onkelinx, Conflict of Inter-

national Jurisdiction: Ordering the Production of Documents in

Violation of the Law of the Situs, 64 Nw. U. L. Rev. 487, 502-504

(1969); Smit, International Aspects of Federal Civil Procedure.

61 Colum. L. Rev. 1031, 1053-1054 (1961) ; Note, Strict Enforcement

of Extraterritorial Discovery, 38 Stan. L. Rev. 841, 843 (1986). Cf.

Restatement (Second) of Foreign Relations Law of the United

States §§ 39, 40 (1965).

T See, e.g., Societe Nationale Industrielle Aerospatiale v. U.S. Dis-

trict Court, 788 F.2d 1408, 1410-1411 (9th Cir. 1986); In re

Messerschmitt, 7657 F.2d at 731; In re Anschuetz, 754 F.2d at 606-

614; Lowrance v. Weinig, 107 F.R.D. 886, 388-889 (W.D. Tenn.

1985) ; Work v. Bier, 106 F.R.D. 45, 52-58 (D.D.C. 1985); Slauen-

white v. Bekum Maschinenfabriken, GmbH., 104 F.R.D. 616, 618-619

(D. Mass. 1985) ; International Society for Krishna Consciousness,

Ine. v. Lee, 105 F.R.D. at 444-447; Compagnie Francaise D’Assu-

rance Pour Le Commerce Exterieur v. Phillips Petroleum Co., 105

F.R.D. 16, 27-28 (S.D.N.Y. 1984); Laker Airways, Ltd. v. Pan

American World Airways, 108 F.R.D. 42, 48-50 (D.D.C. 1984);

Cooper Industries, Inc. v. British Aerospace, Inc., 102 F.R.D. 918,

919-920 (S.D.N.Y. 1984); Graco, Inc. v. Kremlin, Inc., 101 F.R.D.

508, 519-524 (N.D. Ill. 1984) ; Gebr. Eickhoff Maschinenfabrik Und

EFisengieberei mbH vy. Starcher, 328 S.E.2d 492, 497 (W.Va. 1985);

Pierburg GmbH & Co. KG v. Superior Court, 187 Cal. App. 3d 238,

186 Cal. Rptr. 876, 879-880 (1982). Some foreign commentators

continue to urge that the Convention is exclusive. See, e.g., Heck,

U.S. Misinterpretation of the Hague Evidence Convention, 24 Colum.

J. Transnat’!] L. 231 (1986). However, we are aware of no reported

decisions supporting that position.

10

trict court has jurisdiction over a foreign litigant the

Hague Convention does not apply to the production of

evidence in that litigant’s possession” (Pet. App. 4a).

Nothing in the language or history of the Convention

suggests that its procedures were meant to be confined

to situations where the production of evidence takes

place abroad, and to exclude situations where the gather-

ing of evidence, or other preparatory steps, are to occur

on foreign soil. Neither the United States nor foreign

signatories to the Convention have ever subscribed to the

interpretation adopted by the court below. And the court

of appeals’ narrow interpretation would scarcely serve

the interests of domestic litigants, for it would render

the Convention, an often valuable tool for obtaining in-

formation abroad, unavailable and thus useless in the

most common discovery contexts.

We believe that the Hague Convention is potentially

applicable to discovery requests of the sort involved here

and that principles of international comity should guide

a court’s determination whether the Convention’s proce-

dures should be employed in any particular instance.

Although resort to the Convention is not mandatory, it

offers a promising mechanism for reducing international

friction resulting from transnational application of

American discovery techniques. American courts should

be mindful of the need to refrain, when feasible, from

ordering discovery that would violate the laws or clearly

articulated policies of a foreign government. Trial judges

should thus give serious consideration to use of the Con-

vention where to do so would not unduly infringe upon

the interests of the United States or the rights of its

litigants.

Although it has increasingly come to be recognized that

resort to the Convention should be governed by a comity

analysis, there remains considerable disagreement as to

how that inquiry should be conducted in practice, and as

to what its proper outcome should typically be. In the

pages that follow, we outline our view of the proper

comity analysis, and suggest factors that may be par-

11

ticularly important in light of the specific discovery

requests at issue here.

A. Comity Does Not Require First Use Of The Hague

Convention In Every Case Where A Foreign Litigant

Objects To American Discovery Procedures

This Court has described the concept of international

comity as follows:

“Comity,” in the legal sense, is neither a matter

of absolute obligation, on the one hand, nor of mere

courtesy and good will, upon the other. But it is the

recognition which one nation allows within its terri-

tory to the legislative, executive or judicial acts of

another nation, having due regard both to interna-

tional duty and convenience, and to the rights of its

own citizens or of other persons who are under the

protection of its laws.

Hilton v. Guyot, 159 U.S. 118, 163-164 (1895). When

a United States court encounters objections to domestic

discovery from a foreign signatory of the Hague Conven-

tion, it should analyze the interests of the United States

and the foreign country to determine whether the Con-

vention’s procedures should be employed. Absent direct

guidance from Congress, an individualized comity

analysis provides the best—indeed, the only— available

method for resolving conflicts between domestic and for-

eign interests. Properly conducted, a comity analysis

gives the district court the necessary flexibility to con-

sider the multitude-ant various factors that may be rele-

vant in any particular case.

Petitioners seem to agree (Reply Br. 5-6) that resort

to the Hague Convention should be governed by prin-

ciples of comity. They contend, however, that comity

principles, as a general rule, “require that resort be made

8 See, e.g., Laker Airways, Ltd. v. Sabena, Belgian World Airlines,

731 F.2d 909, 937 (D.C. Cir. 1984) ; United States v. First National

Bank, 699 F.2d 341, 345-347 (7th Cir. 1983) ; United States v. Vetco,

Inc., 691 F.2d 1281, 1288-1291 (9th Cir.), cert. denied, 454 U.S.

1098 (1981) ; United States v. First National City Bank, 396 F.2d

at 901-905. Cf. Societe Internationale v. Rogers, 357 U.S. 197.

12

to the Convention in the first instance, at least when the

issue is timely raised” (Pet. 16). Because a comity anal-

ysis is “so flexible and far reaching,” petitioners say,

“trial courts need clear guidelines or presumptions to

apply” lest their findings be “conclusory and result-

oriented” (id. at 17). In petitioners’ view, “[a] rule ordi-

narily requiring resort to the Convention in the first in-

stance” is necessary to ensure “that principles of comity

are given adequate consideration” (ibid.).

We cannot accept petitioners’ submission in this re-

spect. The American concept of international comity

favors an individualized, case-by-case weighing of domes-

tic and foreign interests, not per se rules of the sort peti-

tioners urge. Neither the Convention itself nor its rati-

fication history supports petitioners’ proposed “first use”

rule, and such an inflexible rule would prove unworkable

in practice given the almost infinite variety of trans-

national discovery disputes. And because there remain

some questions about the Convention’s effectiveness as a

general matter in producing needed discovery, we believe

that a “first use” requirement would be unjustified at

this time.

1. The American concept of international comity, from

its earliest origins, has eschewed inflexible rules. See

Hilton v. Guyot, 159 U.S. at 164-165.° This Court has

often stated that comity requires the exercise of judg-

* As this Court noted in Guyot (159 U.S. at 164-165), Justice

Story’s Commentaries on the Conflicts of Law (first published in

1834) stated that “there is indeed great truth” in the observation

“that comity is, and ever must be uncertain; that it must

necessarily depend on a variety of circumstances which cannot

be reduced to any certain rule; that no nation will suffer the

laws of another to interfere with her own to the injury of her

citizens; that whether they do or not must depend on the

condition of the country in which the foreign law is sought to

be enforced, the particular nature of her legislation, her policy,

and the character of her institutions * * *.”

J. Story, Commentaries on the Conflicts of Law § 28, at 28-29 (8th

ed. 1883) (quoting Saul v. His Creditors, 5 Mart. (n.s.) 569, 596

(La. 1827)).

13

ment rather than adherence to mechanical formulae.”

The lower courts agree that “[s]ince comity varies ac-

cording to the factual circumstances surrounding each

claim for its recognition, the absolute boundaries of the

duties it imposes are inherently uncertain.” Lake Air-

ways, Ltd. v. Sabena, Belgian World Airlines, 731 F.2d

909, 987 (D.C. Cir 1984) (footnote omitted). “Mechani-

cal or overbroad rules of thumb are of little value; what

is required is a careful balancing of the interests in-

volved and a precise understanding of the facts and cir-

cumstances of the particular case.” United States v.

First National City Bank, 396 F.2d 897, 901 (2d Cir.

1968).

This Court’s decision in Societe Internationale Vv.

Rogers, 357 U.S. 197 (1958), specifically recognizes that

transnational discovery disputes cannot be _ resolved

through per se rules. A unanimous Court there refused

to hold that a foreign company is excused from produc-

tion of documents whenever foreign law prohibits produc-

tion, noting that a general rule excusing disclosure would

undermine substantive United States interests and en-

courage evasion of domestic law (357 U.S. at 205-206).

The Court noted that discovery under the Federal Rules

“is sufficiently flexible to be adapted to the exigencies of

particular litigation” and that “[t]he propriety of the use

to which it is put depends upon the circumstances of a

given case” (id. at 206).

10 Relying in part on comity principles, this Court recently con-

cluded that foreign government instrumentalities established as

independent juridical entities should normally be treated as distinct

from their sovereigns, but refused to announce a “mechanical for-

mula” for determining when that status should be disregarded. See

First National City Bank v. Banco Para el Comercio, 462 U.S. 611,

626-627, 633 (1983). See also Banco Nacional v. Sabbatino, 376

U.S. 398, 428 (1964) (refusing to establish “an inflexible or all-

encompassing rule” concerning acts of state) ; Disconto Gesellechaft

v. Umbreit, 208 U.S. 570, 579 (1908) (noting that the Guyot deci-

sion “shows that how far foreign creditors will be protected and

their rights enforced depends upon the circumstances of each case’’).

14

2. The fact that this case involves the interpretation

of a treaty provides no reason for the Court to depart

from its traditional reluctance to replace a discriminating

comity analysis with mechanical rules. Petitioners do not

contend that the Hague Evidence Convention itself im-

poses a “first use” requirement, and neither its language

nor its ratification history supports mandatory first use.

Indeed, such a requirement would be inconsistent with

the understanding that the Convention “ ‘makes no ma-

jor changes in United States procedure and requires no

major changes in United States legislation or rules.’ ”

S. Exec. Rep. 92-25, supra, at 5 (quoting Philip Amram,

United States representative and rapporteur at the

Hague Conference). The lower federal courts, adverting

to this ratification history, have generally agreed that the

Convention’s procedures need not necessarily be ex-

hausted.™

A rule dictating mandatory first use of the Convention

would also be unworkable in practice. The Convention

11 The Fifth and Ninth Circuits, like the court of appeals below,

have rejected the first-use requirement. Societe Nationale Indus-

trielle Aerospatiale vy. U.S. District Court, 788 F.2d at 1411;

In re Messerschmitt, 757 F.2d at 731; Pet. App. 7a. Most fed-

eral district court decisions have declined to impose that require-

ment. See, e.g., Lowrance Vv. Weinig, 107 F.R.D. at 388-389;

Work v. Bier, 106 F.R.D. at 54-56; Slawenwhite v. Bekum Maschin-

enfabriken, GmbH., 104 F.R.D. at 618-619; International Society for

Krishna Consciousness vy. Lee, 105 F.R.D. at 449; Compagnie

Francaise D’ Assurance vy. Phillips Petroleum Co., 105 F.R.D. at 32;

Cooper Industries, Inc. v. British Aerospace, Inc., 102 F.R.D. at

919-920; Graco, Inc. v. Kremlin, Inc., 101 F.R.D. at 519-524. How-

ever, a few federal district courts, and a somewhat larger number

of state courts, have required first resort to the Convention, at

least in certain circumstances. See Laker Airways, Ltd. v. Pan

American World Airways, 103 F.R.D. at 51; Philadelphia Gear

Corp. v. American Pfauter Corp., 100 F.R.D. 58, 60 n.3 (E.D. Pa.

1983); Gebr. Eickhoff Maschinenfabrik Und Eisengieberei mbH Vv.

Starcher, 328 S.E.2d at 506; Pierburg GmbH & Co. KG v. Superior

Court, 187 Cal. App. 3d at 243-244, 186 Cal. Rptr. at 879-880;

Vincent vy. Ateliers de la Motobecane S.A., 193 N.J. Super. 716,

721-724, 475 A.2d 686, 689-691 (1984); TH. Goldschmidt A.G. V.

Smith, 676 S.W.2d 448, 445 (Tex. Ct. App. 1984).

15

has been ratified by numerous countries that, in turn,

have markedly different legal systems and varying at-

titudes toward American discovery procedures.” Notably,

12 of the 17 signatory states have executed declarations

under Article 23 of the Convention restricting, in whole

or in part, pretrial discovery of documents.“ The Con-

vention is potentially available for application in a broad

range of civil and commercial litigation—ranging from

antitrust actions to ordinary tort suits—and a foreign

nation’s reaction to a discovery request could well depend

in part on the nature of the underlying action. Most im-

portant, there remain some questions concerning the Con-

vention’s effectiveness as a general matter in producing

needed discovery. Under these circumstances, United

States courts should have discretion to determine whether

the Convention should be utilized in any particular case.

See Seattle Times Co. v. Rhinehart, 467 U.S. 20, 36

(1984) (“The trial court is in the best position to weigh

fairly the competing needs and interests of parties af-

fected by discovery. The unique character of the dis-

covery process requires that the trial court have substan-

tial latitude to fashion protective orders.”’) .

3. The federal government’s limited experience with

the Convention’s procedures also counsels against adop-

tion of an inflexible first-use rule. On four recent occa-

sions, the Securities and Exchange Commission has at-

tempted to employ the Convention’s procedures to obtain

foreign evidence for use in enforcement actions involving

insider trading in violation of the federal securities

12 Apart from the United States, the Convention is in force in

Barbados, Cyprus, Czechoslovakia, Denmark, Finland, France, the

Federal Republic of Germany, Israel, Italy, Luxembourg, the

Netherlands, Norway, Portugal, Singapore, Sweden, and the United

Kingdom.

18 See 7 Martindale-Hubbell Law Directory (pt. VII) at 15-19

(1986) ; Oxman, The Choice Between Direct Discovery and Other

Means of Obtaining Evidence Abroad: The Impact of the Hague

Evidence Convention, 37 U. Miami L. Rev. 733, 771-777 (1988).

16

laws. The Commission twice employed the Convention’s

procedures to obtain non-party evidence of insider trad-

ing in SEC v. Certain Unknown Purchasers of the Com-

mon Stock of, and Call Options for the Common Stock of,

Santa Fe International Corp., No. 81 Civ. 6553 (WWC)

(S.D.N.Y. filed Oct. 26, 1981). See Securities Exchange

Act Release Nos. 9484, 9485, [1981-1982] Fed. Sec. L.

Rep. (CCH) { 98,323 (Oct. 26, 1981). The Commission

sought to secure documents and testimony from third-

party witnesses residing in England and France. The

English request ultimately yielded useful evidence, al-

though the process consumed nine months and entailed

the expenditure of over $40,000 in foreign counsel fees.**

After two and one-half years of litigation in French

courts, however, the French request failed to produce

the requested testimony.”®

14 The Commission has a particularly keen need to obtain foreign

evidence in carrying out its responsibilities for enforcement of

federal securities laws in internationalized capital markets. See

Fedders, Policing Internationalized U.S. Capital Markets: Methods

to Obtain. Evidence Abroad, 18 Int’] Law. 89 (1984).

15 The Commission sought evidence from a hotel, a credit card

company, and two individuals who had acted as stockbrokers for

purchases of Santa Fe securities shortly before the merger an-

nouncement. The federal district court issued letters of request to

the British Central Authority on July 25, 1988 Upon presentation

of the request, an English Master ordered that the evidence be

given. The credit card company and hotel complied. However, the

two individuals refused to comply, arguing that the Commission’s

requests were improper and would violate bank secrecy laws. On

February 23, 1984, after briefing and four days of oral argument,

the English court ordered the two individuals to testify. In re Evi-

dence (Proceedings in Other Jurisdictions) Act 1975 (Q.B. Feb. 23,

1984) (Drake, J.), reprinted in 23 Int’] Legal Materials 511 (1984).

The witnesses testified two months later.

16 The federal district court issued letters of request in May

1983. The French witnesses contested the request. A French tri-

bunal ultimately granted the Commission’s request for testimony on

December 17, 1985. In re Testimony of Constandi Nasser, Trib.

Admin. de Paris, 6erne section—2eme chambre, No. 51546/6 (Dec.

17, 1985). This victory proved, however, to be pyrrhic. The witness

17

The Commission also employed the Hague Convention

procedures on two occasions to obtain non-party evidence

of insider trading in SEC v. Banca della Svizzera Ital-

iana, et al., No. 81 Civ. 1886 (MP) (S.D.N.Y. filed Mar.

27, 1981). The Commission sought documents and testi-

mony from third-party witnesses residing in Italy and

Guernsey. In both cases, letters of request issued pursu-

ant to the Convention’s procedures failed to provide a sig-

nificant portion of the requested evidence.** The Italian

proceedings consumed two months and $20,000 in court

costs and foreign counsel fees. The Guernsey proceedings

refused to testify and the French court, in response, imposed a

minor fine. The Santa Fe litigation was settled on February 26,

1986.

17 The Italian request, issued by the federal court on Aug. 9,

1985, was directed to an SEC-registered broker-dealer in Milan and

to certain individuals affiliated with him. The Court of Appeals

of Milan, by decree dated September 10, 1985, authorized the letter

of request and directed its execution by October 2, 1985. The

Magistrate’s Court of Milan took testimony from the witnesses but

declined to compel production of documents in light of Italy’s

declaration, under Article 28 of the Convention, that it will not

execute pretrial requests for documents. Statement on the Exami-

nation of Witnesses as Requested by a Foreign Letter Rogatory

(Pret. Milano, Italy Oct. 2, 1985).

The Guernsey request, issued by the federal court on Septem-

ber 20, 1985, was directed to a Guernsey banking institution and

concerned testimony and documents relating to the identity of the

beneficial owners of an account utilized to execute certain question-

able transactions. A Guernsey court ordered two witnesses to

appear and to comply with the letter rogatory. On October 7, 1985,

the witnesses moved in Guernsey to set aside the order, contending

that the requested discovery was forbidden by Guernsey law. On

March 11, 1986, the Deputy Bailiff of Guernsey denied the Com-

mission’s request for assistance on the ground that the testimony

sought was a “search for defendants” and thus “fishing in nature.”

In re Evidence (Proceedings in Other Jurisdictions) Act 1975

(Guernsey) Order 1980 (Stat. Inst. 1980 No. 1956). A Guernsey

appeals court dismissed the Commission’s appeal from that order as

moot following a decision of a United States court resolving other

aspects of the case in the Commission’s favor. See SEC v. Tome,

[Current] Fed. Sec. L. Rep. (CCH) { 92,762 (S.D.N.Y. June 3,

1986).

18

consumed eight months and over $50,000 in foreign coun-

sel fees.

The Commission’s experience with Hague Convention

procedures, which has not been entirely positive, may well

be atypical. The Commission is a government enforce-

ment agency, whereas requests for discovery under the

Convention are more commonly made by private parties.

The Commission has resorted to the Convention only four

times, each request being directed to a non-party rather

than to a party before the court, and each request being

made in the context of a fraud suit rather than the more

typical negligence or contract action. The State Depart-

ment informs us that private plaintiffs in the latter sorts

of litigation have found resort to the Convention more

successful. The Commission’s experience, however, does

buttress our belief that adoption of any blanket presump-

tion mandating “first use” of the Convention in all cases

would be unwise. A number of courts have expressed con-

cern that resort to the Convention might impose unjusti-

fied hardships on domestic litigants—frequently individ-

ual tort plaintiffs—who may lack the legal and financial

resources needed to pursue their requests in foreign

tribunals.*

18 See, e.g., Pain v. United Technologies Corp., 637 F.2d 775, 788-

790 (D.C. Cir. 1980), cert. denied, 454 U.S. 1128 (1981) (“there

can be little doubt that the cost to the litigants of employing such

procedures would be exceedingly high”) ; Gebr. Eickhoff Maschinen-

fabrik, mbH. v. Starcher, 328 S.E. 2d at 506 (suggesting that there

may be difficulties inherent in resort to the Convention); Work v.

Bier, 106 F.R.D. 45, 54-55 (D.D.C. 1985) (discussing inadequacies

in German procedures under the Convention, and the problem of

obtaining evidence in admissible form) ; International Society for

Krishna Consciousness vy. Lee, 105 F.R.D. at 450 (suggesting that

Convention procedures are “quite slow and costly’’) ; see also Struve,

Discovery from Foreign Parties in Civil Cases before U.S. Courts,

16 N.Y.U. J. Int’] L. & Pol. 1101, 1111 (1984) (“by comparison with

the means of discovery provided by the Federal Rules of Civil

Procedure, the Hague Convention represents a mode of discovery

which is significantly less certain, less effective, more costly and

more burdensome”). A rule mandating presumptive first use of the

Convention could also impose tactical burdens on domestic litigants,

19

In sum, we see no need or justification for a blanket

presumption requiring domestic plaintiffs to resort to the

Hague Convention before employing the domestic dis-

covery methods made available by federal or state rules.

Instead, the question whether to employ the Convention’s

procedures should be based upon an individualized comity

analysis that takes into account the particular facts and

circumstances surrounding the discovery at issue. The

ultimate determination, like the disposition of other dis-

covery matters, should remain within the considered dis-

cretion of this Nation’s trial courts, which are “in the

best position to weigh fairly the competing needs and

interests of parties affected by discovery.” Seattle Times

Co., 467 U.S. at 36.’°

B. The Decision Below Should Be Vacated And The Case

Should Be Remanded For The Application Of A Proper

Comity Analysis

The United States has repeatedly maintained that

American courts should give serious consideration to the

use of the Hague Evidence Convention whenever a for-

eign litigant from a signatory nation (where the evidence

is located) timely and clearly articulates his country’s

objections to the use of American discovery methods (U.S.

Anchuetz Br. 11-12; U.S. Club Med. Br. 9-11). A court

requiring them to pursue discovery through possibly cumbersome

procedures, while the foreign litigant could take full advantage of

this Nation’s liberal discovery methods. The resulting lack of

mutuality in discovery could alter litigants’ judgments about settle-

ment and trial strategy and could otherwise impair the domestic

judicial process. See Hickman v. Taylor, 329 U.S. 495, 507 (1947)

(“Mutual knowledge of all the relevant facts gathered by both

parties is essential to proper litigation.”); see also 4 J. Moore,

Moore’s Federal Practice {26.52 (2d ed. 1984). Notably, the

United States freely permits litigants in foreign tribunals to use

its liberal discovery methods when they seek evidence located in

this country. See 28 U.S.C. 1782.

19 See, e.g., Insurance Corp. of Ireland, Ltd. vy. Compagnie des

Bauzxites de Guinee, 456 U.S. at 707-709 (discovery sanctions) ;

Herbert v. Lando, 441 U.S. 153, 176-177 (1979) (relevance determi-

nations) ; Societe Internationale v. Rogers, 357 U.S. at 218 (dis-

covery sanctions).

20

should carefully consider the domestic and foreign inter-

ests and provide a reasoned explanation of its decision

to conduct discovery through the Hague Convention,

through American discovery procedures, or through 4

combination of those devices. In the present case, peti-

tioners contended that the discovery sought by respond-

ents would be objectionable to the Republic of France.

Faced with that contention, the court of appeals erred

in failing to apply comity principles in reviewing the

magistrate’s decision to forgo use of the Hague Conven-

tion. This Court, following its normal practice, should

vacate the court of appeals’ decision and remand the case

for application of the correct legal standard. See, ¢.g.,

Anderson v. Liberty Lobby, Inc., No. 84-1602 (June 25,

1986), slip op. 14. Cf. Schlagenhauf v. Holder, 379 U.S.

104, 111-112 (1964).

Courts and commentators have formulated various tests

to guide comity analyses under international law.” Ulti-

20 Section 40 of the Restatement (Second) of Foreign Relations

Law of the United States (1965) suggests consideration of five

factors to resolve international conflicts of law: (a) the “vital

interests” of each state; (b) the resulting hardships to the af-

fected party; (¢) the extent to which conduct takes place in the

foreign state; (d) the nationality of the person; and (e) the

extent to which either state may be able to achieve compliance with

its rules. In the past, courts have often looked to Section 40 for

guidance in international discovery disputes. See, e.g., Compagnie

Francaise D’Assurance V. Phillips Petroleum Co., 105 F.R.D. at

29-32.

In addition, the American Law Institute’s revised Restatement

includes a specific provision dealing with international conflicts

arising from foreign discovery. See Restatement (Revised) of For-

eign Relations Law of the United States § 437 (Tent. Draft No. 7,

1986) (approved May 14, 1986). The provisions state (id. § 437

(1) (c)) that United States courts

should take into account the importance to the * * * litigation

of the documents or other information requested; the degree of

specificity of the request; whether the information originated

in the United States; the availability of alternative means of

securing the information; and the extent to which non-

compliance with the request would undermine important inter-

—_ ee

a ce a

21

mately, however, “what is required is careful balancing

of the interests involved and a precise understanding of

the facts and circumstances of the particular case.”

United States v. First National City Bank, 396 F.2d at

901. In our view, the essential elements of any comity

analysis must include (1) a reasoned evaluation of the

domestic and foreign interests and (2) an attempt to

accommodate, to the extent feasible, legitimate foreign

concerns.

1. a. The central domestic interest is generally the

same in any international discovery dispute. The United

States has a fundamental obligation to assure that do-

mestic litigants are afforded adequate opportunities to

adjudicate their claims. This Court has often recognized

“the importance of ensuring that potential litigants have

unimpeded access to the courts.” Seattle Times, 467 U.S.

at 36 n.22. See California Motor Tranpsort Co. v. Truck-

ing Unlimited, 404 U.S. 508, 510 (1972); NAACP v.

Button, 371 U.S. 415, 429-481 (1968) ; see also Mitsubishi

Motors Corp. v. Solem Chrysler-Plymouth, Inc., No.

83-1569 (July 2, 1985), slip op. 26-27 (Stevens, J., dis-

senting). And it is well settled that a United States liti-

gant is generally entitled to adjudicate his claim in ac-

cordance with the laws of the local forum. See Restate-

ment (Second) of Conflicts of Laws §§ 122, 127 (1971).

ests of the United States, or compliance with the request would

undermine important interests of the state where the informa-

tion is located.

Section 437 and its accompanying comments have proven contro-

versial, particularly insofar as they suggest that foreign discovery

should in all i tances proceed by court order (see Section 487

comment (a) & reporter’s note 2) and that discovery should be

limited to “directly relevant” information (ibid.). See, e.g., Struve,

supra, 16 N.Y.U. J. Int’l L. & Pol. at 1105-1107 (stating that

“in view of the lack of prior authority supporting the Reporter's

position, it is questionable whether the restrictions upon the scope

of discovery contained in [Section 437] accurately represent the

law as it is or the law as it should be”). The Justice Department

has informed the ALI of its objections to several aspects of the

proposed revision.

22

American jurisprudence provides that an important

element of the litigant’s right to judicial access is the

opportunity to discover the pertinent facts surrounding

his claim. That element finds explicit recognition in the

discovery provisions of the Federal Rules of Civil Proce-

dure. Those provisions are central to the conduct of

federal judicial proceedings. The “pre-trial deposition-

discovery mechanism established by Rules 26 to 37 is one

of the most significant innovations of the Federal Rules.”

Hickman v. Taylor, 329 U.S. 495, 500 (1947). Discovery

is the preferred method by which parties may narrow the

basic issues and ascertain the existence of facts germane

to those issues, ensuring that “civil trials in the federal

courts no longer need be carried on in the dark” (id. at

501).

The federal discovery provisions place a high premium

on disclosure. “Under the Rules, the only express limita-

tions are that the information sought is not privileged,

and is relevant to the subject matter of the pending

action. Thus, the Rules often allow extensive intrusion

into the affairs of both litigants and third parties.”

Seattle Times, 467 U.S. at 30 (footnote omitted). “But

the discovery provisions, like all of the Federal Rules of

Civil Procedure, are subject to the injunction of Rule 1

that they ‘be construed to secure the just, speedy, and

inexpensive determination of every action.’” Herbert v.

Lando, 441 U.S. 153, 177 (1979) (emphasis supplied by

the Court). Thus, the ultimate goal of the Federal Rules

is efficient as well as effective discovery.

b. The precise nature of the foreign interests at stake

in discovery controversies has not been well articulated

by the courts or by foreign litigants in the past. Foreign

parties have typically objected to American discovery

methods on the ground that such devices violate their

home country’s “judicial sovereignty.” But such asser-

tions often have an abstract quality and do little, in and

of themselves, to elucidate the substantive foreign inter-

ests at stake. Courts should understand that assertions

of “judicial sovereignty” often incorporate legitimate

notions of territorial integrity—a reluctance to permit

ee cn

a a ee ee Oa ©

me

23

foreign litigants to invade one’s borders, literally or

figuratively, for the purpose of seizing evidence. Objec-

tions based on “judicial sovereignty” are often advanced

by litigants from nations that employ the civil rather

than the common law, nations in which evidence-gathering

is usually conducted by judicial officers rather than by

private parties. In that context, assertions of “judicial

sovereignty” may reflect an understandable reluctance to

forfeit the moderating effects of judicial supervision and

to expose one’s citizens to unpredictable and potentially

abusive evidentiary demands. On the other hand, asser-

tions of “judicial sovereignty” may simply illustrate a

foreign nation’s desire to protect its nationals from lia-

bility, or reflect a preference for its own mode of dispute

resolution instead of ours.

In our view, assertions of foreign “judicial sovereignty”

must be evaluated in light of the established American

principle (see note 6, supra) that a United States court

may order a foreign national, properly subject to the

court’s jurisdiction, to produce evidence located abroad.

As a general matter, it is not unreasonable in principle

for this Nation’s courts to subject foreign corporations

doing business here to the same judicial procedures that

are applied to domestic corporations. In the instant case,

for example, petitioners, corporations owned by the Re-

public of France, have elected to conduct operations in

the United States and compete in the domestic market.

Petitioners have advertised and sold their aircraft in the

United States and presumably have profited from doing

so. One of petitioners’ aircraft has now unfortunately

crashed in Iowa, and respondents seek to recover for their

loss. Under these circumstances, an abstract claim of

“judicial sovereignty” cannot equate to a right—indeed,

it would be an extraordinary privilege—to have all of the

benefits of access to American markets, yet to be free

from the burdens that American judicial procedures gen-

erally impose.”

21 This Nation’s courts, of course, may exercise jurisdiction over

a foreign party only if the party’s contacts with the forum are

24

Foreign objections to American discovery requests

should also be greeted with caution where it is alleged

that compliance would violate a foreign law in the nature

of a “blocking” statute. Blocking statutes, of which the

French law involved here (Pet. App. 47a-48a, 57a) is an

extreme (and not necessarily typical) example, generally

forbid foreign citizens to produce evidence abroad. The

French blocking statute prohibits French nationals from

disclosing information only when it will be used against

them in a judicial or administrative proceeding, permit-

ting them to divulge information voluntarily to any

entity but a court or an administrative body. A number

of commentators have interpreted the French statute to

express little more than simple hostility to American

law.” In our view, objections founded merely on hostility

sufficient “to make it reasonable and just” for the domestic forum

to adjudicate the dispute. Perkins v. Benguet Consolidated Mining

Co., 342 U.S. 487, 445 (1952). Once jurisdiction over a foreign

party has properly attached, the court may require that party to

produce evidence regardless whether it is located in this country or

abroad. But the United States is “not the only nation to enforce its

laws extraterritorially.” Toms, The French Response to the Extra-

territorial Application of United States Antitrust Laws, 15 Int’!

Law. 585, n.1 (1981) (citing examples). While foreign governments

often urge that any claim for production of evidence violates inter-

national law, it is not clear whether they themselves would decline

to order production of evidence located abroad. A German commen-

tator has suggested that “European courts make a similar claim,

although this claim is hidden behind a different configuration of the

relevant legal institutions and norms.” P. Schlosser, Der Justizkon-

flikt zwischen den USA und Europa 44 (1985) (English Summary).

“One can conclude,” he adds, “that there is no rule in international

public law which limits the authority of national courts and agencies

to require the cooperation of foreign parties in discovery and to

impose sanctions for refusals in so far as this also can be done in

a similar situation to a domestic party” (id. at 45).

22 The French blocking statute has been widely interpreted to

evidence hostility both to this Nation’s antitrust law and to its

judicial procedures. See, e.g., Toms, supra, 15 Int’l Law. at 586;

Herzog, The 1980 French Law on Documents and Information, 75

Am. J. Int’] L. 382 (1981). One commentator, examining the legis-

lative report that accompanied the French blocking statute, agreed

that the law “was ‘never expected or intended to be enforced against

ea

25

to American law should be approached with some skep-

ticism in any proper comity analysis.

On the other hand, foreign nations will often have more

specific and concrete interests that merit accommodation

from United States courts. Foreign laws may provide

particular protection to various liberty, property, and

privacy interests, according business secrets or confidential

communications (for example) special immunity from

disclosure. Foreign nations may also provide testimonial

privileges that are generally absent in this Nation’s

courts. In these instances, a foreign government may

have understandable concerns that unbridled American

discovery will infringe substantive protections provided

to its citizens.

As we have suggested above, moreover, foreign asser-

tions of “judicial sovereignty”—to the extent that they

embody legitimate concerns about territorial integrity

and prevention of evidential extravagance—may also

merit accommodation from United States courts. In

weighing such claims, the nature and scope of the re-“~

quested discovery will often be of central concern. Or-

dering that a foreign citizen be deposed on a foreign

nation’s soil obviously works a greater affront to that

nation’s “territorial integrity” than (to take an example

from the instant case) requiring a foreign corporation

doing business here to make admissions that it has pub-

lished advertisements in American magazines. See J.A.

A21-A26. Indeed, this Nation’s courts, sensitive to the

territorial sovereignty of foreign nations, have generally

required use of the Hague Convention where domestic

French subjects but was intended rather to provide them with tacti-

cal weapons and bargaining chips in foreign courts.’” Note, supra,

88 Stan. L. Rev. at 864 (quoting Adidas (Canada) Ltd. v. S.S.

Seatrain Bennington, No. 80 Civ. 1922 (S.D.N.Y. May 30, 1984) ).

We have lodged an English translation of the French legislative

report, obtained from the Stanford Law Review (see 38 Stan. L.

Rev. at 846 n.22), with the Clerk of this Court. See also Graco,

101 F.R.D. at 514 (noting that the foreign litigant had failed to

identify a single case in which the French blocking statute’s sanc-

tions had been imposed).

26

litigants seek the involuntary deposition of a party abroad

or the production of evidence from persons outside the

court’s jurisdiction. See, ¢.g., Anschuetz, 754 F.2d at 615.

And when a foreign litigant expresses his nation’s con-

cern to prevent excessive and abusive evidence-gathering,

the nature and scope of the discovery sought will again

be of critical importance.

We leave it to foreign litigants and their governments

to elaborate their interests in appropriate cases. The

important point, in our view, is that they clearly identify

the specific interest at stake and explain how that inter-

est would be adversely affected by the particular discovery

sought. It is certainly conceivable that petitioners could

identify more particularized substantive interests than

those illuminated in the prior proceedings. On remand,

the foreign interests in this case should be reexamined.

2. Once a foreign litigant has elaborated his nation’s

concerns, the American court should attempt, to the

extent feasible, to accommodate those concerns in the dis-

covery process. The chief goal of the comity process is,

of course, to prevent international friction. The use of

the Hague Evidence Convention can provide an effective

means of achieving that goal. However, as a central com-

ponent of its comity analysis, the court must critically

consider whether or not the Convention can provide fair,

efficient, and effective discovery, taking into account such

factors as whether the evidence can be obtained through

the Convention mechanisms and the expense, burden, and

delays that might result from its use.

Resort to the Convention will inevitably entail some

measure of added expense and inconvenience, whether in

the form of translator’s costs, foreign legai fees, or the

inability to obtain evidence in precisely the form that one

could secure it in domestic discovery. If these transac-

23 As Judge Wilkey explained in Pain v. United Technologies

Corp., 6837 F.2d at 788-790 (footnotes omitted; emphasis in

original) :

Although the Hague Evidence Convention provides a mecha-

nism whereby the recipient nation’s executing authority is

required to assist an American court with such compulsory

ee em ere ~~

eee Eee eee we a eee

27

tion costs are minor relative to the scope of the underly-

ing litigation and the volume of the evidence sought, they

provide little basis for forgoing use of the Convention.

On the other hand, particular foreign nations may have

erected, formally or informally, more substantial barriers

to successful use of the Convention. Resort to the Con-

vention’s procedures may be demonstrably more cumber-

some in some countries than in others. Most significantly,

some foreign nations may have chosen, as France has

done, to make a reservation under Article 23 of the Con-

vention, refusing to accept letters of request “issued for

the purpose of obtaining pre-trial discovery of documents”

(art. 23, 23 U.S.T. 2568). Although petitioners contend

(Pet. 17 n.36) that France’s Article 23 reservation “was

not intended to preclude United States litigants from

obtaining necessary evidence abroad, but rather to pre-

vent discovery of a ‘fishing expedition’ nature,” we think

that foreign litigarts bear the burden of demonstrating

that such reservations do not mean what they say. A for-

eign nation’s insistence on retention of an absolute reser-

vation under Article 23 necessarily raises serious ques-

force as its own courts can exercise in a pretrial evidentiary

situation, numerous exceptions to the international obligation

exist, which potentially bar this device from being executed at

all. For example, foreign judicial cooperation may he with-

held altogether if the discovery assistance is deemed prejudicial

to state sovereignty.

Furthermore, even when discovery abroad is available, the

breadth of evidence ordinarily expected from a full-fledged

American-style deposition might be constricted for any number

of reasons: the foreign state’s own procedures might limit or

foreclose cross-examination, full participation of counsel might

not be allowed, or a verbatim record might not result, thus

limiting admissibility of the testimony in an American court.

The scope of foreign privilege might prove broader under the

letter rogatory procedure than under either local law or Ameri-

can law, and in some cases, official translators might be re-

quired for each piece of paper involved.

24See 7 Martindale-Hubbell Law Directory (pt. VII) at 16

(1986) ; Borel & Boyd, Opportunities for and Obstacles to Obtaining

Evidence in France for Use in Litigation in the United States, 13

Int’] Law, 35, 43-44 (1979).

28

tions about the likely effectiveness of discovery requests

directed to it under the Convention.”

In our view, the foreign litigant is best situated to

inform the court of his country’s procedures with respect

to the Convention. He need not demonstrate that the

Convention will function as effectively or as efficiently as

the Federal Rules. But he must satisfy the court that,

under the circumstances, resort to the Convention is con-

sistent with the “just, speedy, and inexpensive” determi-

nation of the suit (Fed. R. Civ. P. 1). The district court

should not require resort to the Convention unless it has

reasonable prospects of producing effective and efficient

discovery under the facts and circumstances of the partic-

ular case.

3. We believe that the trial court, with its expertise in

discovery matters, is best situated to conduct the kind of

particularized comity analysis that we have outlined, and

that the case should be remanded for tha purpose. Al-

though we express no view on the proper outcome on

remand, we believe that courts in general should give

careful consideration to use of the Convention in appro-

priate cases. The Convention has major positive attri-

butes—it provides a nonexclusive discovery mechanism

that is free from foreign objections and it can yield evi-

dence that is not otherwise obtainable. Although domestic

litigants may complain that resort to the Convention will

entail added expense and delay, a court can allay such

concerns by careful supervision and wise exercise of its

discretion. A court may require the foreign defendant,

for example, to pledge his full cooperation with the Con-

vention proceedings abroad. Under recent amendments

to the Federal Rules, moreover, a district court generally

must provide a timetable for discovery. See Fed. R. Civ.

P. 16(b). Thus, a court might specify Convention proce-

dures as an initial method for discovery, subject to rea-

sonable time constraints. If those procedures fail ta

produce effective and efficient discovery, or lead to abusive

25 We understand that Germany is now considering domestic

regulations that would limit the scope of its Article 23 reservation.

29

practices, the court can return to traditional American

discovery procedures and, if necessary, impose sanctions

(see e.g., Fed. R. Civ. P. 11).*°

Quite apart from the Hague Evidence Convention,

moreover, federal courts have substantial power to reduce

international friction resulting from overly broad dis-

covery requests. “There have been repeated expressions

of concern about undue and uncontrolled discovery, and

voices from this Court have joined the chorus.” Herbert

v. Lando, 441 U.S. 153, 176 (1979). But Federal Rule

26(b) “emphasizes the complete control that the court

has over the discovery process” (8 C. Wright & A. Miller,

Federal Practice and Procedure, Civil § 2036, at 267 (1970)

(footnote omitted) ), and trial courts have broad author-

ity to enter orders protecting both domestic and foreign

litigants from discovery abuse. As this Court has stated

(Herbert, 441 U.S. at 177):

[T]he requirement of Rule 26(b) (1) that the mate-

rial sought in discovery be “relevant” should be

firmly applied, and the district courts should not

neglect their power to restrict discovery where “jus-

tice requires [protection for] a party or person from

annoyance, embarrassment, oppression, or undue bur-

den or expense. . . .” Rule 26(c). With this author-

ity at hand, judges should not hesitate to exercise

appropriate control over the discovery process.

Moreover, because “pretrial depositions and interroga-

tories are not public components of a civil trial” (Seattle

26 We strongly disagree with the court of appeals’ suggestion

that “ ‘the greatest insult to a civil law country's sovereignty would

be for American courts to invoke the foreign country’s judicial aid

merely as a first resort, subject to the eventual override of their

rulings under the Federal Rules of Civil Procedure’” (Pet. App.

7a (quoting Anschuetz, 754 F.2d at 613)). We believe that a for-

eign court would welcome the opportunity to inform its American

counterpart of the foreign perspective on discovery issues, even if

the American court might ultimately disagree. Indeed, the Hague

Convention provides a valuable means for domestic and foreign

courts to engage in constructive discourse. That dialogue will pro-

vide the domestic and foreign courts with invaluable and authorita-

tive insight into each others’ laws.

30

Times, 467 U.S. at 33), litigants may bave reasonable

expectations that sensitive discovery materials will be

shielded from public disclosure. See generally Marcus,

Myth and Reality in Protective Order Litigation, 69

Cornell L. Rev. 1 (1983).

Finally, we note that a United States court, in the exer-

cise of comity, may wish to exercise a particularly active

supervisory role in litigation involving foreign parties.

Foreign litigants are accustomed to close judicial scrutiny

of evidence-gathering in taeir own courts. See, e.g., Lang-

bein, The German Advantage in Civil Procedure, 52 U.

Chi. L. Rev. 823 (1985). Enhanced judicial participation

in the discovery process will provide additional assurance

to foreign litigants of the fairness of American judicial

proceedings.

CONCLUSION

The court of appeals’ decision should be vacated and

the case remanded for further proceedings.

Respectfully submitted.

CHARLES FRIED

Solicitor General

RICHARD K. WILLARD

Assistant Attorney General

ALBERT G. LAUBER, JR.

Deputy Solicitor General

JAMES M. SPEARS

Deputy Assistant Attorney General

JEFFREY P. MINEAR

Assistant to the Solicitor General

DAVID EPSTEIN

ABRAHAM D.SOFAER DAVID M. SCHLITZ

Legal Adviser Attorneys

Department of State

DANIEL L. GOELZER

General Counsel

Securities and Exchange Commission

AUGUST 1986

* U. S. GOVERNMENT PRINTING OFfrice; 1966 491507 20307