The case of the day is Government of Ghana v. ProEnergy Services, LLC (8th Cir. 2012). I first reported on the case in my post of July 14, 2011. To recap the facts:

Ghana had entered into a contract with Balkan Energy Limited for the refurbishment of a power plant in Ghana. ProEnergy Services, LLC was the prime subcontractor.

Balkan claimed that Ghana had breached the contract by failing to provide a connection to the national electricity grid and by failing to pay certain fees. Balkan commenced an arbitration against Ghana in the Hague, and Ghana responded with a lawsuit in the High Court of Ghana, alleging fraud.

Meanwhile, ProEnergy had sued Balkan in the federal court in Missouri. Ghana applied to the federal court for judicial assistance in obtaining evidence from ProEnergy for use in the arbitration and the High Court litigation. The court granted the application and, in the decision I reported on July 14, it refused to reconsider it after Balkan intervened in the case to challenge the decision.

Today’s decision sheds some light on subsequent developments. Shortly after the District Court granted Ghana’s application for judicial assistance, Balkan and ProEnergy settled their disputes with each other. In light of the District Court’s refusal to reconsider its decision to grant judicial assistance, Balkan turned over some documents, but it refused to turn over the settlement agreement between it and ProEnergy.¹ The district court refused to compel the production, and Ghana appealed.

Can A Sovereign Apply For Judicial Assistance?

I would first like to focus on one of my pet issues, which I’ve written about a few times and which I’ll keep writing about until a court agrees with me.² Can Ghana seek judicial assistance under the statute? The request did not come from the Ghanaian court itself, or from the arbitral tribunal, but from the Government of Ghana in its capacity as litigant. The statute permits a US court to grant judicial assistance

pursuant to a letter rogatory issued, or request made, by a foreign or international tribunal or upon the application of any interested person …

So Ghana must be proceeding as an “interested person.” But the presumption is that the word “person”, when used in a statute, does not include a sovereign. This is why the government cannot be the target of a discovery request brought under the statute (which permits the court to order a “person” to testify or produce documents). See Al Fayed v. CIA, 229 F.3d 272 (D.C. Cir. 2000). The reasoning in Al Fayed is all about statutory construction of the word “person”, and it seems to me highly desirable to give the same word the same meaning when it appears in the preceding sentence.

This may just be a technicality. I think that a state could make an application through its attorney general or another officer. Still, I would like to see a court adopt this view, which means, I guess, that a party has to argue it.

The Decision

On to the decision itself. Although the parties and the court tangentially raised the issue of a “settlement privilege”, the court decided the case not on those grounds (which likely would have been a loser for Balkan), but rather on grounds of relevance to the foreign proceedings. This is very odd. Receptivity to the evidence is one of the factors the court, when performing the Intel analysis, should consider. But the Intel analysis goes to whether the court should grant the application for judicial assistance, not to whether a subpoena issued pursuant to a request for judicial assistance should be quashed or modified. Here, the court had already decided to grant judicial assistance, but the Eighth Circuit nevertheless focused on the use that Ghana could or could not make of the settlement documents in the foreign proceedings. Even more oddly, the court focused on the admissibility of the settlement agreement in light of FRE 408,³ without a real explanation of why that question is relevant given that the proceedings are taking place abroad. In short, this is a very odd decision. It is perhaps best explained by the standard of review. The court—properly, I think—reviewed the district court’s decision for abuse of discretion only. Appellate courts are rightly hesitant to second-guess discovery decisions, particularly where there is no issue of evidentiary privilege or any constitutional issue.

1. The Eighth Circuit decision does not suggest that a subpoena issued after the court granted the application for judicial assistance, and so the procedural posture of the case is a little muddled. In my view the best practice is to ask, in your request for judicial assistance, for leave to issue a subpoena, and then once the court grants your application, to actually issue the subpoena. This helps, I think, to clarify things. A § 1782 proceeding is really a two-step process. First, you ask the court for permission to invoke the mechanisms of US discovery. If you’re unsuccessful, you can appeal. If you’re successful, you issue your subpoena, and if the target objects, then the objections follow the ordinary course of discovery motion practice under the FRCP. That didn’t (apparently) happen here, though I think it’s not crucial to the outcome.
2. My most detailed post about this issue was my post on Republic of Ecuador v. Bjorkman, one of the § 1782 proceedings Chevron brought in the Lago Agrio affair, though I also discussed it briefly in my post on Thai-Lao Lignite v. Laos.
3. Rule 408 makes settlement offers and agreements, and statements made during settlement negotiations, inapplicable to prove liability or the amount of a claim