Case of the Day: ACL Netherlands BV v. Lynch

The case of the day is ACL Netherlands BV v. Lynch, [2019] EWHC 249. A US grand jury issued a subpoena to Hewlett Packard Enterprises. The subpoena called for HP to produce documents in the possession of direct or indirect subsidiaries in the UK. But those subsidiaries had received the responsive documents in the course of UK litigation, and they were subject to what we would call a protective order allowing them to use the documents only for purposes of the UK litigation, without leave of court. (Unlike in US practice, where protective orders are ad hoc, in English practice there are rules imposing limitations on disclosure that apply more generally). The subsidiaries sought permission from the High Court to produce the documents.

The subsidiaries argued that they or HP would be in contempt of the US court and might be sanctioned. But the judge held that they had not met their burden under English law to obtain leave to make a disclosure for reasons unrelated to the UK litigation. As a technical matter, the judge reasoned they had now shown that they, rather than HP, might be sanctioned by the US court. But leaving that issue aside, the judge held that the subsidiaries had not shown that the need to make a disclosure outweighed the policies of the English nondisclosure rules.

The outcome of the case is not surprising in light of many blocking statute decisions. The judge had some questions about whether a US court would punish HP or its subsidiaries in these circumstances:

However, I feel sure that the relevant US courts will appreciate and take into account that I must apply the law of this jurisdiction in accordance with the public policy considerations which underlie it; that in accordance with that law and policy the documents are in a sense held to this court’s order and subject to its protection; and that in denying to their parent what under US law they are obliged to provide, but which under English law they are not in a position or bound to deliver to it, the Applicants, having quite properly sought directions, are not flouting the US Court’s will or jurisdiction; rather, they are being required to abide by the laws and rules of court to which they have submitted in bringing these proceedings and in obtaining the advantages of this court’s rules and processes, including disclosure to them of documentation and statements they would not otherwise have had.

I guess we will see.

A couple of thoughts on the case: first, I suppose the US authorities might do better to seek the evidence pursuant to the two countries’ mutual legal assistance treaty. The decision doesn’t make clear why that didn’t happen.

Second, I think it is useful to consider the case alongside Kiobel v. Cravath, Swaine & Moore, in which the Second Circuit disapproved of attempts to use § 1782 to direct a subpoena to a law firm that had documents in its possession, subject to a protective order, because of its work in a foreign lawsuit. As the law of cross-border discovery develops, it may just be that courts are skeptical about attempts to obtain documents from parties that have them only because of their participation in a foreign lawsuit, despite the orthodox (US) rule that a protective order does not trump a subpoena.

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