The case of the day is In re Application of Mare Shipping, Inc. (S.D.N.Y. 2013). The case arises out of the sinking of the Bahamian-flagged oil tanker MT Prestige, owned by Mare Shipping, Inc., a Liberian corporation, off the coast of Spain in 2002. In 2003, Spain sued the American Bureau of Shipping and related companies, claiming that ABS was negligent in classifying the Prestige as a fit vessel to carry fuel. In 2008, Judge Swain granted ABS’s motion for summary judgment. Spain later sued Mare Shipping and the vessel’s captain, Apostolos Mangouras, in the Provincial Court of La Coruña. The Provincial Court held a hearing beginning October 16, 2012 and ending July 10, 2013.
On July 8, two days before the end of the hearing, Mare Shipping sought leave to take discovery from the law firm that had represented Spain in the US action, Squire Sanders LLP. Mare claimed that a declaration of Captain Efstratios Kostazon that Spain’s lawyers had submitted in the US case was contrary to his testimony in the Spanish action; that Spain’s lawyers had coerced a witness to act as Spain’s paid expert in the US proceedings by threatening him with prosecution in Spain; and that another declaration Spain had submitted in the US case, the declaration of Jens Jorgen Thuesen, was based on misleading documents Spain’s lawyers had provided to him. Squire Sanders denied all of these claims. Mare Shipping admitted that it had the supposedly false declaration and had used them in cross-examination in the Spanish proceedings.
Squire Sanders argued, first, that the court lacked subject matter jurisdiction under the FSIA because it was an agency or instrumentality of its client, the Kingdom of Spain. The judge rejected this argument on the grounds that the firm was neither an “organ of the foreign state” nor majority-owned by Spain, as 28 U.S.C. § 1603(b) requires. The court rejected the analogy to cases that have quashed subpoenas to counsel for Native American tribes on sovereign immunity grounds, finding the FSIA clear.
Squire Sanders also attempted to show that the statutory prerequisites for application of § 1782 were not met. First, it argued that Spain, not it, was the real target of the subpoena, and that Spain was not “found” in the district, as the statute requires. The judge rejected this argument on the strength of precedents holding that it is sufficient for the target of the subpoena to be found in the district, even if the real party in interest was elsewhere. Second, and more plausibly, Squire Sanders argued that the foreign proceedings had concluded, so the discovery was not “for use in” the Spanish case. But Mare Shipping said that it might seek to enter the evidence on appeal, in another action in Spain, or in the European Courto f Human Rights. There were arguments about whether the evidence would be admissible in these forums, but the judge swept the issue aside on the grounds that “it is unwise—as well as in tension with the aims of section 1782—for district judges to try to glean the accepted practices and attitudes of other nations from what are likely to be conflicting and, perhaps, biased interpretations of foreign law.”
The real fight turned on the Intel discretionary factors. Here, the fact that Spain was the real target of the discovery sought did matter. Spain was a participant in the foreign proceeding. Thus the first Intel factor (whether the target of the discovery was a party to the foreign action) weighed against enforcement of the subpoena. Moreover, the judge weighed Mare’s failure to seek the discovery from the Spanish court against its case, citing both the second factor (the nature of the foreign proceedings) and the third factor (circumvention of foreign proof-gathering restrictions).
In short, “Considering that, for all intents and purposes, the real subject of the subpoena is Applicants’ opponent in the foreign proceeding and the failure of Applicants to seek the requested material through Spanish proof-mechanisms, the Court denies Applicants’ motion.” (citation and internal quotation marks omitted).