National Institute for Trial Advocacy

Discovery Abroad: An Overview of European Blocking Statutes and the Hague Convention on the Taking of Evidence Outside the U.S.—Part One of Two

Written by NITA guest blogger Lukas Holub


This article is the first of a two-part series on discovery outside the U.S. Part II will be published on April 4.

In today’s globalized world, the impact of civil litigation involving entities with multinational structures is rarely confined to the borders of one country.[1] The offices, officers, managers, manufacturing sites, or any assets can be located anywhere in the world, and so can be the source of evidence needed for successful litigation. The geographical deployment of documents, often stored electronically, will usually not pose a problem for their acquisition. But the differences between American and European legal systems do not reflect this globalized nature of business.[2]Map for Part I.jpg (368 KB)

One of the areas where the common law and civil law systems diametrically differ is the process of obtaining evidence in expectation of trial or during trial.[3] Because the power of litigants in the United States in gathering evidence is extremely broad, European countries have enacted what are known as blocking statutes in an effort to protect their sovereignty and the interests of persons under their jurisdiction.[4] These conflicting laws may cause uncertainty among the parties litigating in U.S. courts, as well as among the foreign entities, regardless of whether a party to a lawsuit.[5] Discovery requests of the litigants may not be complied with, and the foreign entities may face sanctions for non-compliance imposed by the U.S. courts, or, alternatively, sanctions for breaking the non-disclosure laws imposed by their domestic authorities.

This article should serve as an introduction to and a basic overview of this matter for parties on both sides of the issue and for both American and foreign nation lawyers. The article first briefly introduces the nature of discovery and evidence-taking processes in the United States and in the countries of continental Europe. Next, it introduces the conflicting laws, covering American rules of civil procedure; international treatises; blocking statutes, with examples from France and the Czech Republic; and European data protection laws. Finally, it analyzes in further detail the situations in which a U.S. litigant is seeking to obtain evidence located in Europe or, accordingly, where a European entity is compelled by a U.S. court to produce evidence the entity is legally authorized or instructed not to disclose. The article discusses significant U.S. court decisions.

Discovery and Evidence Taking in the United States and Continental Europe

Discovery in the United States

In the United States, discovery is a vital and inherent part of litigation.[6] It encompasses the process and methods “by which a party or a potential party to a lawsuit obtains and preserves information regarding the action.”[7] The permissible scope of discovery, using the Federal Rules of Civil Procedure (FRCP) in this article, is to obtain admissible evidence as well as any information that itself might not be admissible during the trial, as long as the information is relevant to the case and not privileged.[8] “Reasonably calculated to lead to the discovery of admissible evidence” is a sufficient justification for obtaining the information.[9] The litigants may choose from variety of discovery tools and combine them, including written interrogatory questions, requests for production of documents, or depositions of witnesses under oath.[10] In federal court, certain information must be produced automatically by a party after commencement of the action notwithstanding any requests by the opposing party, and a deposition to perpetuate testimony of a witness may be taken even before an action is filed.[11]        

Despite some protective measures codified in FRCP, their scope makes the American discovery one of the broadest in the world.[12] Due to its breath and associated costs, discovery is sometimes used as a tactical weapon that may deter a party from further litigation and force it to settlement.[13] One of the important characteristics of the American discovery is that unless a party or a witness refuses to comply with a discovery request, it is conducted by attorneys without interference of the court.[14]

The Process of Obtaining Evidence in Europe

The process of obtaining evidence in civil law countries is significantly different. The use of the term “discovery” is not appropriate, because the pre-trial discovery as understood in the U.S. practically does not exist.[15] The private parties or their attorneys are not granted powers that would allow them to compel the opposing party or other witnesses to produce the evidence directly to them. It is the judicial officer through whom the evidence is obtained.[16]

The process is different from the commencement of the action when the complaint, after its filing, is served upon the defendant by the court, not by the plaintiff.[17] In the Czech Republic, the plaintiff in the complaint, and the defendant in the answer, has a duty to designate and subsequently produce its own evidence that supports her claim or defense.[18] The sanction, or rather result, for not complying with these duties by the party with the burden of proof is a loss of the claim. After the lawsuit is initiated, the evidence is produced directly to the court, not to the opposing parties.[19]

Normally, the parties use evidence that is already available to them. To compel the opposing party to produce certain evidence that the first party is not in possession of, the first party has two options: either shift the burden of proof to the opposing party, such as in claims alleging discrimination; or propose to introduce a documentary evidence and designate a person who has a control over the document.[20] That person then may be ordered to produce the document to the court. If that person does not comply with the order, the court may impose monetary sanctions. If there is a risk that the evidence will not be available at the time of the trial, a party may also petition the court to secure the evidence before the trial begins.[21] However, if a party is not aware of the existence of some information or document, it has no tool to discover it.[22] Fishing expeditions are not even a remote possibility. In other words, the evidence that may damage the case will generally not be disclosed to the opposing party.[23]

The differences in the approach to evidence taking are obvious. While in the United States it is the responsibility of the parties that are gifted broad discovery powers, in Europe the taking of evidence is viewed as a governmental role.[24] “Attempts by U.S. litigants to gather evidence abroad for U.S. litigation have been viewed as usurping foreign sovereignty,” especially when the scope of these attempts far exceeds what would be admissible in local litigation.[25]

Cross-Border Discovery: Conflicting Laws

Cross-border Discovery Requests and Subpoenas

The power of the American courts to order their own nationals to produce documents located within the U.S. is unquestioned.[26] But these powers are not limited to persons and evidence located within the country. If the court establishes personal jurisdiction over the person and the person has control over the documents, the court may, under its enforcement jurisdiction, order that person to perform an act in another state.[27], [28]

A deposition in a foreign country may be taken 1) under an applicable treaty or convention; 2) under a letter of request; 3) on notice, before a person authorized to administer oaths; or 4) before a person commissioned by the court to administer any necessary oath and take testimony.[29] The applicable treaty in this area is the the Convention on the Taking of the Evidence Abroad in Civil or Commercial Matters (“Hague Convention”), and one of the designated means of obtaining evidence abroad under this Convention is in the form of letters of request.[30] Evidence obtained in response to a letter of request can be admitted in U.S. court even if the testimony was not taken under oath or “because of any similar departure from the requirements for depositions taken within the United States.”[31] The FRCP do not state any special rules for other discovery methods conducted in foreign countries.

The nonparties are ordered to provide testimony or produce documents through court-issued subpoenas.[32] The subpoena power of the court is however limited to 100 miles within the distance of the court.[33] An exception to this rule may apply for nationals or residents of the United States who are in a foreign country.[34] The court will issue subpoenas to these persons only if it finds that it is necessary in the interest of justice and that it is not possible to obtain the testimony or documents in any other manner. Foreign nationals are beyond the subpoena power of American courts.[35]

The discovery of evidence is usually undertaken by the parties without interference of the court. But when a good faith attempt to obtain the evidence fails, a party may move the court to compel the disclosure or discovery by a court order.[36] If the order is not obeyed, the court will order the defaulting party to pay reasonable expenses and in addition may impose sanctions, including striking the pleadings, dismissing the action, or rendering a default judgment.[37] The courts have broad discretion in imposing these sanctions.[38] If a person does not comply with a subpoena without adequate excuse, they may be held in contempt of court.[39] An important factor in deciding whether to impose sanctions on a party resisting the discovery based on a foreign nondisclosure law is a good faith of that party.[40] Although it has been established that the existence of a conflicting blocking statute does not itself preclude the courts from issuing a discovery order, the U.S. courts cannot simply ignore such laws.[41]

The Hague Convention on the Taking of the Evidence Abroad in Civil or Commerical Matters


“The Hague Convention is an international treaty designed to bridge the differences in the taking of evidence between common law and civil law countries.”[42], [43] Under this treaty, the evidence “intended for use in judicial proceedings, commenced or contemplated,” located in a foreign country, may be requested upon the central authority which every contracting state must designate.[44], [45] The evidence is obtained by means of a letter of request that must comply with specific requirements, or through diplomatic channels.[46] The requested person may, however, refuse to provide the evidence if it is privileged or if it has duty to refuse under local law.[47] Moreover, the contracting state “may declare that it will not execute Letters of Request issued for the purpose of obtaining pre-trial discovery of documents as known in Common Law countries.”[48] France is among the countries who made such a declaration; the Czech Republic is not.[49]

The reasons for the reluctance of U.S. courts to follow the evidence-taking processes under the Convention are obvious. The courts must send the requests first to the central authority of the foreign state, the requested persons may object on the grounds of local law, and in some countries the pre-trial discovery requests may not be accepted at all. Although the United States Supreme Court has recognized that the Hague Convention is the supreme law of the land, as are the FRCP, the court ruled that the Convention does not have a preemptive effect on the FRCP and presents only a non-exclusive means for taking the evidence abroad.[50]

European Blocking Statutes and Data Protection Laws

A blocking statute is by its definition a “[l]aw enacted in one jurisdiction to obstruct the local (extra jurisdictional) application of a law enacted in another jurisdiction.”[51] However, to have the blocking effect on discovery of evidence, the statutes do not have to be always enacted with this obstructing purpose. Because of the different conception of gathering evidence, European laws simply do not anticipate broad discovery requests.[52] Therefore, the blocking statutes can be of a various nature and can impose various sanctions for their breach. The severity of the sanctions and whether they are of a civil or criminal nature have been recognized by U.S. courts as one of the factors in determining whether a person should be excused from the compliance with a court order.[53]

The French nondisclosure law is probably the most discussed European blocking statute.[54] It was enacted with the direct purpose of giving French companies a defense to U.S. discovery requests.[55] Under the French statute, it is punishable by six months of imprisonment and a €18,000 fine to “request, search for or communicate . . . documents or information of an economic, commercial, industrial, financial or technical nature for the purpose of establishing evidence in view of foreign judicial or administrative procedures or in the context of such procedures.”[56], [57] Because the provision states it is subject to international treatises, it is clearly designed to direct the U.S. courts to proceed under the Hague Convention rather than under the FRCP.

Some countries, like the Czech Republic, do not have a true blocking statute. Under the Czech Penal Code, it is a crime to disclose a classified information that may damage the interests of the Czech Republic, but that usually will not be the case in civil litigation.[58] What may have the effect of a blocking statute in civil matters is the Czech Banks Act, under which a foreign bank with a branch in the Czech Republic that violates bank secrecy may be fined up to 50 million Czech crowns.[59] Furthermore, in the Czech Republic, as in any other country in the European Union, the U.S. litigants should be concerned with the Union’s broad data protection laws. In May 2018, the General Data Protection Regulation (GDPR) became effective.[60], [61]

The protected personal data is broadly defined as “any information relating to an identified or identifiable natural person (‘data subject’).”[62] Any entity that processes the data must comply with strict requirements and must guarantee certain rights to the data subjects.[63] The transfer of the data to third countries is possible only if the protection of the data subject under the GDPR is not undermined.[64] The regulation provides several options for the international data transfers,[65] including contractual clauses,[66] situations when “the transfer is necessary for the establishment, exercise or defence of legal claims,”[67] or when the data subject explicitly consents to the transfer.[68] However, the European Commission indicated that for the purposes of U.S. discovery, the transfer will be possible only if it is necessary for some legitimate and compelling interests that outweigh the interests and fundamental rights of the data subject.[69]

Infringement of the regulation does not expose a person to criminal penalties, but the applicable administrative sanctions are arguably astronomical. They can amount to €20 million, or up to 4 percent of the total worldwide annual turnover of the preceding financial year, whichever is higher.[70] Infringement of the GDRP also gives the data subjects a private cause of action.[71]

The problems that can arise under these conflicting laws are self-evident. Litigants in the United States may seek to obtain certain information or documents that are in control of a foreign entity and are relevant to the case. That entity, having some affiliation to the parties to the lawsuit, may, as a tactical weapon, choose to invoke certain nondisclosure laws and refuse to comply with a discovery request or a subpoena. In some cases, that entity may be prohibited from disclosing the documents, regardless of its intentions, facing severe financial or criminal sanctions. If the U.S. court proceeds under the Hague Convention, it might involve a longer and less familiar process. But more importantly, the litigant seeking the evidence may still not get the information to the full extent as she would were the evidence located in the United States. If the court subsequently issues an order and seeks to exercise its enforcement jurisdiction under the FRCP, the requested entity may not be able to avoid one or the other sanctions.

 

Lukáš Holub is a lawyer practicing in Prague, Czech Republic, where he graduated from Charles University, Faculty of Law. Mr. Holub also earned his J.D. at Nova Southeastern University, Shepard Broad College of Law, Fort Lauderdale, where he was a research assistant to Professor Michael J. Dale. He is a member of the Florida Bar. Lukáš can be reached at lukas.holub.mail@gmail.com.

 

To read more articles by Professor Dale’s research assistants at Nova Southeastern, click here.

 

[1] See generally Avi Stadler, The Growing Challenge of International Litigation, Esquire Deposition Solutions (Feb. 23, 2017), https://www.esquiresolutions.com/growing-challenge-international-litigation/ (last visited Mar. 20, 2019).

[2] See generally The Common Law and Civil Law Traditions, UC at Berkeley, https://www.law.berkeley.edu/library/robbins/CommonLawCivilLawTraditions.html (last visited Mar. 20, 2019).

[3] See generally U.S. v. First National City Bank, 396 F.2d 897, 900–01 (2d Cir. 1968).

[4] See Geoffrey Sant, Court-Ordered Law Breaking, 81 Brook. L. Rev. 181, 185 (2015).

[5] See generally In Re Uranium Antitrust Litigation, 480 F. Supp. 1138, 1144 (N.D. Ill. 1979).

[6] Jack H. Friedenthal et al., Civil Procedure 380 (5th ed. 2015).

[7] Id.

[8] See Fed. R. Civ. P. 26(b)(1); Friedenthal, supra note 6, at 380.

[9] E.g. Christopher Cotton & Laurel Harbour, International Discovery: Navigating Uncharted Waters, 74 Def. Counsel J. 274, 274 (2007).

[10] See Fed. R. Civ. P. 26–27.

[11] Fed. R. Civ. P. 27(a)(1).

[12] See generally Société Nationale Industrielle Aérospatiale v. U.S. Dist. Ct. for the S. Dist. of Iowa, 482 U.S. 522, 542 (1987).

[13] Friedenthal, supra note 6, at 380.

[14] See generally Aérospatiale, 482 U.S. at 542.

[15] See generally Sant, supra note 4, at 184.

[16] See Aérospatiale, 482 U.S. at 543.

[17] See Claudia Borsutzki, Comparison of the Discovery Process in Civil Litigation in U.S. and Germany – An Introduction, Legal Knowledge Portal (Aug. 19, 2015), https://legalknowledgeportal.com/2015/08/19/comparison-of-the-discovery-process-in-civil-litigation-in-the-u-s-and-germany-an-introduction/ (last visited Mar. 20, 2019).

[18] See Karel Svoboda et al., Občanský soudní řád 526–31 (2d ed. 2017) [Civil Procedure Code (Commentary)] (Czech).

[19] See Aérospatiale, 482 U.S. at 543.

[20] See Svoboda, supra note 18, at 552–53.

[21] Občanský soudní řád [Civil Procedure Code], Zákon č. 99/1963 Sb., § 78 (Czech).

[22] Special rules for securing evidence apply in anti-trust cases. See Zákon o náhradě škody v oblasti hospodářské soutěžě [Act on Actions for Damages for Infringements of Competition Laws], Zákon č. 262/2017 Sb., § 10 (Czech). In a proceeding for damages caused by anticompetitive conduct, the court may, if it is necessary and proportionate to the claim, order the person who controls the evidence relevant to the case to make it available to the petitioner or to disclose to the petitioner the location of the evidence. Id. However, the petitioner must again identify the evidence as closely as possible based on available information. Id.

[23] Todd J. Burke, E-Discovery and Privilege: A comparative Analysis, N.J. Law. (Aug. 2006).

[24] Sant, supra note 4, at 184.

[25] Id.

[26] See In Re Uranium Antitrust Litigation, 480 F. Supp. 1138, 1144 (N.D. Ill. 1979).

[27] See U.S. v. First National City Bank, 396 F.2d 897, 900–01 (2d Cir. 1968); In Re Uranium, 480 F. Supp. at 1144.

[28] “[T]he issue of control is more a question of fact than of law, and it rests on the determination of whether the defendant has practical and actual managerial control over, or shares such control with, its affiliate, regardless of the formalities of corporate organization.” In Re Uranium, 480 F. Supp. at 1145. This test is applicable to U.S. parent corporation-foreign subsidiary corporation, as well as to foreign parent corporation-American subsidiary corporation, scenarios. See id. The threat of punishment for disclosure of the documents under conflicting blocking statute does not preclude the court from finding that the party is in control of the documents. See Société Internationale pour Participations Industrielles et Commerciales, S.A. v. Rogers, 357 U.S. 197, 205 (1958).

[29] Fed. R. Civ. P. 28(b).

[30] Convention on the Taking of Evidence Abroad in Civil and Commercial Matters [Hague Convention] art. 1, July 27, 1970, 23 U.S.T. 2555; 847 U.N.T.S. 231.

[31] Fed. R. Civ. P. 28(b)(4).

[32] Id. at 45.

[33] Id. at 45(c)

[34] 28 U.S.C.A. § 1783 (West, Westlaw through P.L. 115-223).

[35] Relational, LLC v. Hodges, 627 F.3d 668, 673 (7th Cir. 2010).

[36] Fed. R. Civ. P. 37(a).

[37] Fed. R. Civ. P. 37(b).

[38] See e.g. Daval Steel Products v. M/V Fakredine, 951 F.2d 1357, 1365 (2d Cir. 1991).

[39] Fed. R. Civ. P. 45(g).

[40] See Compagnie Francaise d’Assurance Pour le Com. Exterieur v. Phillips Petroleum Co., 105 F.R.D. 16, 29 (S.D.N.Y. 1984).

[41] In Re Uranium Antitrust Litigation, 480 F. Supp. 1138, 1145 (N.D. Ill. 1979).




[42] Compagnie Francaise, 105 F.R.D. at 26.

https://www.hcch.net/en/publications-and-studies/en/instruments/conventions/status-table/?cid=82 (last visited Mar. 20, 2019).

[43] The information about the contracting states can be found at Acceptances of Accession, Hague Conf. on Priv. Int’l. L., https://assets.hcch.net/docs/f094fd72-6213-4950-96ea-955f41a311eb.pdf (last visited Mar. 20, 2019); Status Table, https://www.hcch.net/en/instruments/conventions/status-table/?cid=82 (last visited Mar. 20, 2019).

[44] Hague Convention, art. 1, 2.

[45] In the U.S., the central authority is the U.S. Department of justice: U.S.A. Central Authority (Art. 2) and Practical Information, Hague Conf. on Priv. Int’l. L., https://www.hcch.net/en/states/authorities/details3/?aid=528 (last visited Mar. 20, 2019).

[46] Hague Convention, art. 1, 3, 4, 15–17. “The judicial authority which executes a Letter of Request shall apply its own law as to the methods and procedures to be followed. However, it will follow a request of the requesting authority that a special method or procedure be followed, unless this is incompatible with the internal law of the State of execution or is impossible of performance by reason of its internal practice and procedure or by reason of practical difficulties. A Letter of Request shall be executed expeditiously.” Id. at art. 9.

[47] Id. at art. 11. Moreover, the execution of the letter of request may be refused if the addressed state “considers that its sovereignty or security would be prejudice thereby.” Id. at art. 12.

[48] Id. at art. 23.

[49] See Status Table, Hague Conf. on Priv. Int’l L., https://www.hcch.net/en/publications-and-studies/en/instruments/conventions/status-table/?cid=82 (last update Mar. 3, 2019; last visited Mar. 20, 2019).

[50] Société Nationale Industrielle Aérospatiale v. U.S. Dist. Ct. for the S. Dist. of Iowa, 482 U.S. 522, 532–40 (1987).

[51] Bus. Dictionary, http://www.businessdictionary.com/definition/blocking-statute.html (last visited Mar. 20, 2019).

[52] See generally Sant, supra note 4, at 185.

[53] See U.S. v. First National City Bank, 396 F.2d 897, 901–02 (2d Cir. 1968); In Re Uranium Antitrust Litigation, 480 F. Supp. 1138, 1147 (N.D. Ill. 1979).

[54] See, e.g., Laurent Martinet & Ozan Akyurek, The Perils of Taking Discovery to France, 20 Prac. Litigator 39 (2009).

[55] See Ela Bardah & Thomas Rouhette, The French Blocking Statute and Cross-Border Discovery, Int’l Ass’n of Def. Couns., https://www.iadclaw.org/publications-news/defensecounseljournal/the-french-blocking-statute-and-cross-border-discovery/ (last visited Mar. 20, 2019).

[56] Id.

[57] This 1 bis is regularly invoked by French companies. Id. The blocking statute contains also a less-used Article 1:

Subject to treaties or international agreements, it is prohibited for any individual of French nationality or who usually resides on French territory and for any officer, representative, agent or employee of an entity having a head office or establishment in France to communicate to foreign public authorities, in writing, orally or by any other means, anywhere, documents or information relating to economic, commercial, industrial, financial or technical matters, the communication of which is capable of harming the sovereignty, security or essential economic interests of France or contravening public policy, specified by the administrative authorities as necessary.

Id.

[58] Trestní zákoník [Criminal Code], Zákon č. 40/2009 Sb., § 316–18 (Czech).

[59] Zákon o bankách [Banks Act], Zákon č. 21/1992 Sb., § 36h(3)(j)(4)(c) (Czech).

[60] Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data, and repealing Directive 95/46/EC (General Data Protection Regulation), art. 99(2), O.J. 2016 L 119/1 [hereinafter GDPR].

[61] The GDPR became effective on May 25, 2018. The states of the European Union are expected to implement the provisions into their national laws. However, the regulation will be directly applicable as of this day in all states regardless of the implementation.

[62] GDPR, art. 4(1). The definition further provides that “an identifiable natural person is one who can be identified, directly or indirectly, in particular by reference to an identifier such as a name, an identification number, location data, an online identifier or to one or more factors specific to the physical, physiological, genetic, mental, economic, cultural or social identity of that natural person.” Id.

[63] “Processing” is again broadly defined as “any operation or set of operations which is performed on personal data or on sets of personal data, whether or not by automated means, such as collection, recording, organisation, structuring, storage, adaptation or alteration, retrieval, consultation, use, disclosure by transmission, dissemination or otherwise making available, alignment or combination, restriction, erasure or destruction”. Id. at art. 4(2).

[64] Id. at art. 44.

[65] See Christian Schröder, Obtaining Discovery from EU After GDPR’s Passage, Orrick (Feb. 06, 2017) (reprinted from Feb. 06, 2017 ed. of N.Y.L. J.), https://www.orrick.com/Insights/2017/02/Obtaining-Discovery-From-EU-After-GDPR-Passage (last visited Mar. 20, 2019).

[66] GDPR, art. 46(3)(a).

[67] GDPR, art. 49(1)(e).

[68] GDPR, art. 49(1)(a).

[69] Denise Talbert & Mark Cowing, When Aerospatiale Meets The GDPR: Can U.S. Litigants Expect Limits On Discovery of EU Personal Data?, JD Supra (Feb. 7, 2018), https://www.jdsupra.com/legalnews/when-aerospatiale-meets-the-gdpr-can-u-81663/ (last visited Mar. 20, 2019).

[70] GDPR, art. 83.

[71] Id. at art. 78.

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