Case of the Day: In re SKAT Tax Refund Litigation

The case of the day is In re SKAT Tax Refund Litigation (S.D.N.Y. 2024). After a trial date had been set and long after the close of fact discovery, both sides in the case, a multi-district litigation consolidated before Judge Kaplan in New York, sought issuance of letters of request to take testimony abroad. The main issue involved the defendants’ motion to take the testimony of a witness, Shah, in Denmark. The defendants justified their delay in seeking the testimony by noting that Shah had previously lived in the UAE and had only recently move to Denmark. Judge Kaplan rejected that argument out of hand:

Execution of the Hague Convention is not a prerequisite to the issuance or honoring of a letter rogatory. The letter rogatory is a centuries-old judicial vehicle that predates the Hague Convention, and they continue to be issued and honored outside the framework established by that treaty. As one magistrate judge in this district observed, “the [Hague] Convention was drafted to expand and liberalize the previously available avenues for discovery, not to constrict them or limit the jurisdiction of the courts of the signatory states.” Thus, even where no treaty obliges a state to honor requests for judicial assistance, such requests are “usually granted by reason of comity.” Moreover, while defendants claim that the UAE is “a nation adverse to facilitating foreign discovery through the letters rogatory process,” they do not dispute that the UAE “executed a letter rogatory issued by a U.S. court . . . in March 2021, i.e., more than eight months before discovery closed in these actions.” In addition, defendants could have sought Shah’s voluntary testimony, but it does not appear that they made any effort to do so. Putting that aside, even if Shah were inaccessible to defendants while in the UAE, defendants nonetheless would be responsible for an unwarranted delay in seeking the letter rogatory in light of the fact that Shah was extradited to Denmark, a Hague Convention signatory, in December 2023, several months before defendants sought his testimony in this case.

Issuance of letters of request is a matter for the court’s discretion, and so I am not going to say the judge’s view was wrong. But leaving aside the delay of months after Shah was sent to Denmark, I am not sure the judge had a realistic view of the traditional letter rogatory process. There are many opportunities for delay in that process. Sometimes a letter rogatory may be delayed at the State Department. Sometimes it may be delayed at the US embassy in the requested state. Sometimes it may be delayed in the requested state’s ministry of foreign affairs or its ministry of justice. Sometimes it may be delayed in the foreign court. And then the process of transmission through the diplomatic channel has to happen in reverse. Given the costs associated with the letter rogatory process, which include translation costs and a hefty State Department fee, it is not unreasonable to decide against seeking issuance of a letter rogatory even if you would have sought issuance of a letter of request if the witness had been in a Convention state.

The case also highlights the challenge created by pretrial deadlines and trial dates set by US courts in the taking of evidence abroad. Suppose it’s a good aspiration to say that letters of request should be executed within six months. Well, if a typical pretrial schedule provides, say, four to seven months for discovery, then a six-month timeframe for execution is not necessarily that helpful. And given how precious trial dates are, I think most judges are likely to have the same reaction that Judge Kaplan had about steps that run the risk of causing a delay in the trial.

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