Tag: Discovery

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Soriano v Forensic News. Court of Appeal confirms high bar to disciplining discovery forum shopping.

Soriano v Forensic News LLC & Ors [2023] EWCA Civ 223 deals with the discipline an English court should hand out to defendants trying to use foreign proceedings and their discovery rules, to assist them in the defence of a claim (here a libel claim) in England and Wales. (Defendants’ attempt at dismissing jurisdiction had earlier failed).

In a joint and fairly succinct opinion, Voss MR, Carr LJ and Warby LJ dismiss the contention that the defendants should be served with an anti-suit injunction (also refused at first instance by Murray J a mere 20 days back; this was a most swift appeal) to restrain them from continuing US proceedings. These had been initiated in the District Court for the Southern District of New York (the DCSDNY) on 6 December 2022. Defendants seek an order there requiring HSBC USA to produce two very broad categories of banking documents relating to Mr Soriano’s companies. Defendants here, claimants in the US, rely in 28 USC §1782 (a so-called 1782 application) allowing a US court to provide assistance to an applicant in gathering evidence in support of legal proceedings in a foreign court. It provides that: “[t]he district court … may order [a person] to … produce a document or other thing for use in a proceeding in a foreign … tribunal”, and “[t]he order may be made … upon the application of any interested person”.

The Court of Appeal relied like the judge on the grounds per South Carolina Insurance Co v. Assurantie Maatschappij “De Zeven Provincien” NV [1987] 1 AC 24 to find that defendants were not guilty  of “conduct which [was] oppressive or vexatious or which [interfered] with the due process of the court” in seeking the US order.

In essence, the Court supports the lawful exercise of evidence gathering and does not easily decide that use of foreign proceeding for same be considered oppressive.

Geert.

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SCOTUS in ZF Automotive v Luxshare. A break on discovery tourism in arbitration.

The arbitration community in particular was eagerly awaiting judgment of the US Supreme Court in ZF Automotive v Luxshare. SCOTUS has now held that the use of the relevant US CPR rule, on assistance of foreign tribunals, does not apply to arbitration.

Matthias Lehmann reviews the judgment here and makes valid points on how the ruling could and perhaps should have gone the other way, particularly in light of the use of ‘international’ and ‘tribunal’. Whatever the merits of the finding, it confirms a limiting approach courts are taking in accepting discovery shopping. This is also testified eg by the Dutch courts’ approach in Kiobel, and the English courts’ approach in Akkurate and, in an alternative view, in Glaxo v Sandoz.

Geert.

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Koch Films v Ouragan Films et al. The French SC on provisional measures under Brussels IA.

Gilles Cuniberti  discusses Koch Films v Ouragan Films et al at the French Supreme Court, a case which as also signalled by Hélene Péroz. The judgment is an important one for it signals the continuing uncertainty of interpreting ‘provisional’ under Brussels Ia. In its earlier case-law (Ergo; Haras de Coudrettes) the SC took a more relaxed approach than a strict reading of CJEU St.Paul Dairy might suggest. Unlike Gilles I do not think the SC’s judgment here necessarily signals a return to orthodoxy. In rebuking the Court of Appeal for having too readily dismissed the measures as not being provisional, and in demanding it review whether the measures might not (also) be meant to preserve evidence, it could be said that the opposite might be true: as long as the measure at least in part preserves evidence, other motives do not endanger its provisional character.

En se déterminant ainsi, par une affirmation générale, sans rechercher si ces mesures, qui visaient à obtenir la communication de documents en possession des parties adverses, n’avaient pas pour objet de prémunir la société Koch contre un risque de dépérissement d’éléments de preuve dont la conservation pouvait commander la solution du litige, la cour d’appel a privé sa décision de base légale au regard des textes susvisés [7]

One will have to await future direction.

Geert.

EU Private International Law 3rd ed 2021, 2.559.

 

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Akkurate: Whether English discovery may act extraterritorially under the EU Insolvency Regulation, and a clear difference following Brexit.

Graham Woloff eaor Calzaturificio Zengarini eaor re Akkurate Ltd, [2020] EWHC 1433 (Ch) concerns the question whether the court has the power under section 236(3) of the Insolvency Act 1986 to require persons resident in the EU to produce books and papers and an account of their dealings with a company being compulsorily wound up in England and Wales (it is not disputed that Akkurate’s centre of main interests (“COMI”) was in England and Wales under the European Insolvency Regulation EIR).

EIR 2000 applies to this case, because the winding up of Akkurate was before 26 June 2017, however the issue is not materially different in the new Regulation. There are inconsistent first instance decisions which Vos C reviews ia at 27 ff and at 54 after consideration, he considers s236(3) does not have extraterritorial effect on the basis of what he considers to be the binding authority of Re Tucker (a bankrupt) [1990] Ch. 148. however that following the EIR 2000 (unchanged in EIR 2015) the European regime can and does extend the territoriality of purely domestic insolvency provisions. CJEU authority cited is in particular C-339/07 Seagon v Deko Marty Belgium (at 58 ff) – which I find may be a bit optimistic. Vos C also decides that he can and should apply his discretion to grant orders as formulated at 68.

Clearly, post Brexit, the situation will revert to Tucker. Which would make the English courts less attractive than their continental counterparts – although of course one would have to wait for CJEU authority to confirm the issue less equivocally.

Geert.

(Handbook of) EU private international law, 2nd ed. 2016, Chapter 5,

 

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Derivatives’ forum shopping aka Gerichtshof Einkaufen. Suing Bayer of Germany in New York, applying German law.

Many thanks indeed Kevin La Croix for flagging the suit brought in New York by a group of Bayer AG shareholders, against Bayer (with seat at Leverkusen, Germany), concerning the not altogether successful purchase of Monsanto by Bayer. Kevin has excellent analysis and I am happy to refer.

Claimants of course pre-empt arguments of lack of subject-matter jurisdiction and, subsidiarily, forum non conveniens – please refer to Kevin’s overview for the arguments to and fro. Most interesting. It brought back to me echoes of the Australian case of Tiger v Morris, not because the subject-matter is similar (it is not) but because in this increasingly globalised world (despite Covid19), courts everywhere are increasingly asked to consider the reach of their courts in cases with competing local and foreign interests. Comity considerations underlying the historic roots of conflict of laws are being brought back to the fore, no doubt also partially as a result of the impact of third party financing, contingency fees etc.

One to keep an eye on. One wonders whether Bayer might be launching a related case in Germany, then triggering A33/34 considerations.

Geert.

 

 

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Glaxo v Sandoz. Collateral use of evidence. Discovery (‘disclosure’) shopping at the High Court.

Update 22 March 2019 for a similar application in the US, see Postalis, No. 18-mc-497 (JGK), analysed by Laura Kelly.

Glaxo Welcome v Sandoz et al  [2018] EWHC 3229 (Ch),  puts the spotlight on an important part of international forum shopping, namely discovery /disclosure, in particular collateral use of document obtained in one jurisdiction, in litigation in another. What is fundamentally at stake is that the launch of proceedings in a discovery friendly jurisdiction, may be simply employed as a jack for obtaining evidence to be used in a discovery-heavy jurisdiction. (A few months back the principles were also applied in Buzzfeed v Gubarev [2018] EWHC 1201 (QB)

Claimants apply for an order permitting the second claimant to use certain documents disclosed by some of the defendants (“the Sandoz Defendants”) in the claim in the English courts, in a claim in Belgium between the second claimant and Sandoz NV (“Sandoz Belgium”). The two claims are part of global litigation between members of the GlaxoSmithKline and Sandoz groups of companies. In Europe there are claims in several jurisdictions including England and Wales, The Republic of Ireland, Germany, The Netherlands and Belgium. The disclosure exercise between the claimants and the Sandoz Defendants has been very substantial. It involved the Sandoz Defendants reviewing 406,300 documents using 50 legally qualified reviewers. This led to the subsequent disclosure of slightly in excess of 75,000 documents to the claimants.

As Marsh CM notes at 11, ‘There is a marked contrast in the manner in which litigation is conducted in England and Wales on the one hand and Belgium (and most other Civil law countries) on the other hand. In England and Wales, the ability to obtain disclosure that is adverse to the other party’s claim is an important feature of litigation. However, the evidence provided in connection with the application shows that disclosure is only available in a very limited form in Belgium. One of the issues to be determined is whether disclosure obtained in this jurisdiction should be made available to a party that is engaged in litigation in a jurisdiction where disclosure, if not unknown, is very limited in scope.’

He is of course spot on: obtaining relevant documentation from the other party is not easily done in Belgium (and elsewhere) and often needs to be deduced from final filings of submissions or indeed at the hearing stage.

Relevant authority is discussed at 22 ff., and is really quite relevant: the discussion shows among others great consideration of rule of law concerns, mutual trust between EU Member States and Council of Europe parties, and the relevance of applicable law in the assessment (at 22(5): ‘The Belgian Claim proceeds under harmonised EU law as set out in the Trade Mark Directive. It follows that the English court is in a better position to consider initial relevance of the documents to the issues in the Belgian Claim than would be the case were the claim to be one brought under domestic Belgian law’).’

Final conclusion is in favour of collateral use of a substantial amount of documents. It is worth copying Marsh CM’s reasons in full: at 60:

(1)    The parties to this claim, and associated companies, are engaged in litigation on a very wide scale in many jurisdictions. They are part of very substantial businesses with equal resources. There is no suggestion that the application is oppressive.

(2)    Although the legal basis for this claim and the Belgian Claim are markedly different, there are similarities between some of the issues that are engaged.

(3)    The claimants have been able to satisfy the court that the majority of the documents they seek to use are likely to be relevant to the Belgian Claim. The interests of justice would therefore militate in favour of the claimants having an opportunity to obtain advice about their use in the Belgian Claim.

(4)    Use of the documents to enable the second claimant to consider whether, having obtained advice, a claim against additional parties should be pursued is, to my mind, more compelling than use of documents in connection with the Belgian Claim. There are no risks of adversely affecting the existing proceedings. The court should be slow to stand in the way of a party who wishes to obtain advice about pursuing a lawful course of action.

(5)    There is now an agreed procedure for the orderly progress of the appeal in Brussels with the second claimant filing an additional brief followed by Sandoz Belgium. The disruption, if any, by the introduction of additional documents has been minimised.

(6)    The number of documents the claimants seek to use is relatively small. Those that may be used in the Belgian Claim are not disproportionate in volume to what is at stake in those proceedings. There is no real danger that the Belgian Claim will be overwhelmed with additional documents even if all of them are deployed and Sandoz Belgium considers it is necessary to file additional documents to counter documents having been ‘cherry picked’ by the claimants.

(7)    The difference of approach between litigation in England and Belgium is a factor, but one of limited weight. There is no suggestion that the use of documents obtained in disclosure is an abuse of this court’s process. The risk of the Belgian Court’s process being subverted by the introduction of disclosure documents is marginal, particularly bearing in mind the involvement of the Belgian lawyers and the procedure that has been agreed.

(8)    I accept Mr Hickman’s submission in relation to the documents exhibited to Morris 7. The documents that are exhibited were extensively discussed in the witness statement which was read by the Deputy Judge. Although the claimants do not make an application for a declaration that they are permitted to use those documents as of right, the documents have been legitimately deployed for the purposes of an application heard in open court (subject only to the pro tem confidentiality order).

(9)    It is not open to the Sandoz Defendants to say, and they have not submitted, that if the order permitting use of the documents is made, their position in the Belgian Claim is prejudiced, in the sense that the likelihood of them successfully prosecuting the claim and/or defending the counterclaim is reduced. The interests of justice require that material which is likely to be relevant should be permitted for proper purposes. A reduction in their prospects of success is an immaterial consideration in their favour and, if anything, it weighs in the balance in favour of the claimant.

 

Geert.

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Is the end of discovery in Ireland nigh? The Irish Court of Appeal is very critical in Tobin v MOD. (And Hogan J reminds us of great potential for PhDs).

Given that discovery plays an important factor in forum shopping, Hogan J’s very critical comments on the extensive possibilities in Ireland are quite relevant. Arthur Cox have good analysis of [2018] IECA 230 Tobin v MOD here  and I am in general happy to refer.  Those of you interested in comparative litigation really should take a moment to read the Judge’s comments in full. Yet again, it seems to me, a topic for serious PhD (in comparative civil procedure) analysis.

Geert.

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Platinum Partners: Comity no bar to allowing US discovery in Bankruptcy cases.

In Platinum Partners, Chapman J held that foreign discovery laws should be considered for comity concerns, yet they are not determinative of whether discovery should be permitted under United States law.

Foreign Representatives sought access to documents from US audit firms concerning investment funds that were debtors in Cayman Islands liquidation proceedings recognized under Chapter 15 as foreign main proceedings. Jacob Frumkin has excellent insight and I am happy to refer.

Section 1521(a) of the Bankruptcy Code provides that, upon recognition of a foreign main proceeding, a bankruptcy court may, “at the request of a foreign representative, grant any appropriate relief” … “where necessary to effectuate the purpose of [chapter 15] and to protect the assets of the debtor or the interests of the creditors.”  The first main argument of the auditors was that Cayman law does not permit the discovery of audit work papers or materials that are not a debtor’s property and, if the Court were to grant the motion, its interests and the interests of comity would not be protected.

The Court dismissed this argument, noting that

“it is well-established that comity does not require that the relief available in the United States be identical to the relief sought in the foreign bankruptcy proceeding; it is sufficient if the result is comparable and that the foreign laws are not repugnant to our laws and policies.” and that

“requiring this Court to ensure compliance with foreign law prior to granting relief sought pursuant to chapter 15 would require the Court to engage in a full-blown analysis of foreign law each and every time a foreign representative seeks additional relief in the United States, which may result in differing interpretations of U.S. law depending on where the foreign main proceeding was pending.”

Comity considerations surface in the most technical of corners.

Geert.

 

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