Section 1782 as a useful discovery tool in aid of judgment execution for foreign judgment creditors
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SECTION 1782 AS A USEFUL DISCOVERY TOOL IN AID OF JUDGMENT EXECUTION FOR FOREIGN JUDGMENT CREDITORS
Section 1782 of the United States Code codifies the international assistance from the United States federal courts in obtaining evidence for use in foreign proceedings. A sometimes-overlooked use of Section 1782 is for foreign judgment creditors with assets potentially available for execution in the United States. Section 1782 is available for discovery in aid of judgment execution and, unlike the execution itself, does not require a judgment domesticated in the United States.
Generally, “any interested person” can apply for judicial assistance under Section 1782 in seeking documents, testimony, or other types of evidence.
The “foreign proceedings” to which Section 1782 applies traditionally include conventional court proceedings, but exclude purely commercial arbitration.[1] Applicants can seek discovery from to-be parties to the “reasonably contemplated” future proceedings, as well as from third parties that might otherwise not be subject to the foreign courts’ compelling powers.
Section 1782 can also prove useful to judgment creditors in the executory phase of the foreign proceeding. For example, a judgment holder may wish to obtain documents from or depose a third party in the United States to whom a foreign debtor transferred assets to analyze any fraudulent transfers.
While debtors will argue that such discovery is impermissible because it is the actual judgment enforcement, this is a red herring. In the case In re Clerici, 481 F.3d 1324 (11th Cir. 2007), the defendant from whom discovery was sought argued that a Section 1782 request was inappropriate where the applicant attempted to discover the defendant’s assets and other financial information to assist in executing the applicant’s judgmentin Panama.
The Eleventh Circuit rejected the argument and explained:
“As to the second statutory requirement–that the request must seek evidence—[defendant] argues that [applicant] is not seeking evidence, but rather is attempting to enforce its judgment through a § 1782 request. We disagree because [applicant] asked for assistance in obtaining only [defendant’s] sworn answers to questions regarding his assets and other financial matters. The district court recognized this key distinction and properly concluded that the request for assistance was limited to seeking evidence from [defendant], and therefore, was proper under § 1782.”
See also In re Application for Discovery Pursuant to 28 U.S.C. § 1782, No. 1:19-mc-0102, 2020 U.S. Dist. LEXIS 10243, at *13 (N.D. Ohio Jan. 22, 2020) (“The Court finds no fault with the fundamental content of the requests — they are properly aimed at uncovering assets that could be levied against to execute on the Italian court’s judgment for damages.” […] The applicants also correctly point out that Pocci is confusing discovery in preparation for execution with the actual execution.”)
This
distinction is significant in that Section 1782 discovery does not require that
the foreign judgment be domesticated, which, if met with resistance, may prove
to be a lengthy process. Section 1782 discovery also gives foreign parties
access to the federal enforcement powers in obtaining otherwise unavailable
evidence. Feel free to reach out to our office to discuss obtaining discovery in the United States under
Section 1782.
[1] However, recent decisions from the Fourth and Sixth Circuit Court of Appeals have ruled that Section 1782 applies to commercial arbitration, indicating a circuit split. Comp. NBC v. Bear Stearns & Co., 165 F.3d 184 (2d Cir. 1999); Republic of Kazakhstan v. Biedermann Int’l, 168 F.3d 880 (5th Cir. 1999) (not applicable) with Servotronics, Inc. v. Boeing Co., 954 F.3d 209 (4th Cir. 2020); Abdul Latif Jameel Transp. Co. v. FedEx Corp. (In re Application to Obtain Discovery for Use in Foreign Proceedings), 939 F.3d 710 (6th Cir. 2019) (applicable).