Case of the Day: In re Application of Kazakhstan

The case of the day is In re Application of Republic of Kazakhstan (S.D.N.Y. 2015). I love this case, because it raises one of my favorite issues under § 1782. In 2013, an arbitral tribunal in Sweden awarded Anatolie Stati and related parties $199 million against Kazakhstan on account of the illegal seizure of a gas plant. Kazakhstan brought an action to set aside the award in the Swedish courts, and it sought leave in New York to take discovery from Clyde & Co., which had acted as counsel for third parties in other arbitrations where the value of the gas plant was at issue. Kazakhstan’s hope was that it would find evidence that Stati had used a lower valuation for the plant in those arbitrations than it used in the arbitration against Kazakhstan.

Judge Wood granted the application for leave to take discovery, and Stati sought to vacate the order and quash the subpoena that had issued. The question of interest was whether Kazakhstan could properly bring a § 1782 application. The statute provides:

The district court of the district in which a person resides or is found may order him to give his testimony or statement or to produce a document or other thing for use in a proceeding in a foreign or international tribunal, including criminal investigations conducted before formal accusation. The order may be made pursuant to a letter rogatory issued, or request made, by a foreign or international tribunal or upon the application of any interested person and may direct that the testimony or statement be given, or the document or other thing be produced, before a person appointed by the court.

Now, it’s pretty well-established that a foreign state is not an “person” from whom discovery can be taken under § 1782, because in general, the word “person” in a statute does not include sovereigns. Al Fayed v. CIA, 229 F.3d 272 (D.C. Cir. 2000). So I have suggested that a foreign state should not be an “interested person” who can bring an application for discovery:

The same considerations that apply when determining whether the target is a person … should apply when determining whether the applicant is a person. One implication of this is that a foreign state may not be a “person” entitled to apply for judicial assistance under the statute. Courts have sometimes permitted foreign states to seek and obtain judicial assistance under the statute where the foreign state did not proceed under the Hague Evidence Convention, a mutual legal assistance treaty, or some other treaty mechanism. See, e.g., Republic of Ecuador v. Bjorkman, 801 F. Supp. 2d 1121 (D. Colo. 2011), aff’d, No. 11-cv-01470-WYD-MEH, 2011 WL 5439681 (D. Colo. Nov. 9, 2011). But Al Fayed v. CIA, the case that established that the United States is not a person for purposes of the statue, seems to apply with equal force to any sovereign: “More generally, the Court has repeatedly held that the word ‘person’ in a statute does not include a sovereign government absent affirmative evidence of such an inclusory intent.” Al Fayed v. CIA, 229 F.3d 272, 274 (D.C. Cir. 2000). The rule applies even when the sovereign is a plaintiff seeking relief rather than a defendant or respondent asserting immunity from a court’s jurisdiction:

In any event, the Supreme Court applies the constructional principle against finding “person” to include a sovereign even in the absence of sovereign immunity or comity concerns. It did so, for example, in Breard v. Greene, 523 U.S. 371, 378 (1998), holding that Paraguay was not a “person” entitled to sue under 42 U.S.C. § 1983, and in United States v. Cooper Corp., 312 U.S. at 604-05, holding that the United States was not a “person” entitled to bring treble damage actions under § 7 of the Sherman Act.

Al Fayed v. CIA, 229 F.3d at 275. Since “identical words and phrases within the same statute should normally be given the same meaning,” FCC v. AT&T Inc., 131 S. Ct. 1177, 1185 (2011), it seems to follow that a foreign state cannot rely on the statute alone when seeking judicial assistance in the federal court, notwithstanding cases such as Bjorkman.

T. Folkman, International Judicial Assistance § 4.5 (2012).

Judge Stein did not adopt this reasoning. He recognized that the word “person” generally does not include the sovereign, but he reasoned as follows:

In In re Ecuador, No. C-10-80225, 2010 WL 4973492 (N.D. Cal Dec. 1, 2010), the court expressly held that sovereign states are “interested person(s)” that can use section 1782 to obtain discovery. Id. at *1, *3. In arriving at this conclusion, Judge Edward Chen undertook a thorough discussion of the factors set forth in Cooper. He explained that section 1782’s predecessor statutes explicitly permitted foreign states to request judicial assistance and that the 1964 amendment that added the “interested person” provision to section 1782 was intended to broaden rather than narrow “the scope of those who could seek judicial assistance.” 2010 WL 4973492 at *3 (citing 1964 U.S. Code Cong. & Admin. News at 3789). The court also noted that courts frequently construe the word “person” not to include a sovereign in order to avoid subjecting a sovereign to liability and implicating concerns of sovereign immunity, none of which are at issue here. 2010 WL 4973492 at *4.

I think the judge’s decision is reasonable, but I think it is incorrect. It’s one thing to acknowledge that a word can have different meanings in a statute. But here, if the judge is right, it has different meanings in almost the same sentence. And I don’t think that the exclusion of sovereigns from the definition of the word “person” is invariably for the protection or benefit of the sovereign. Consider Price v. Socialist People’s Libyan Arab Jamahiriya, 294 F.3d 82, 96 (D.C. Cir. 2002), where the court held that a foreign state was not a “person” for the purposes of the Due Process Clause. Anyway, as I noted in my post on the Bjorkman case, and as Judge Chen discussed in the decision Judge Stein cited, it’s clear that foreign states can avoid the problem by having an appropriate government official act as the applicant. Despite the outcome of the case, I still would recommend that foreign states act through an appropriate officer in order to avoid this issue.

About Ted Folkman

Ted Folkman is a shareholder with Murphy & King, a Boston law firm, where he has a complex business litigation practice. He is the author of International Judicial Assistance (MCLE 2012), a nuts-and-bolts guide to international judicial assistance issues, and of the chapter on service of process in the ABA's forthcoming treatise on International Aspects of US Litigation, and he is the publisher of Letters Blogatory, the Web's first blog devoted to international judicial assistance, which the ABA recognized as one of the best 100 legal blogs in 2012, 2014, and 2015.

Leave a Reply

Your email address will not be published. Required fields are marked *