United States: "Cross-Border Litigation"

Globalization has created new challenges for companies threatened by, or embroiled in, cross-border litigation. Assets and evidence, in the form of witnesses and documents, may be spread across multiple countries and legal systems. Judicial attitudes and procedures in these systems can vary as much as national political relations, on such key concerns as reciprocity in the recognition of judgments and assistance to courts or litigants seeking evidence for cases pending in the jurisdiction.

Efficiently managed litigation in, or involving the development of evidence from, multiple jurisdictions requires a mix of consistent case direction, curiosity and creativity. Whether the litigation will be a success may turn on the "devil" or the "opportunity" found in unexpected details. Consequently, attorneys managing cross-border litigation who rely on expert outside counsel should not only develop familiarity with the international process for gathering evidence in general, but also explore with expert local counsel the practicalities or details of practice in the relevant jurisdictions.

Obtaining Testimonial Evidence

Clearly, when seeking an understanding of the process for obtaining significant testimonial evidence abroad for use in U.S. litigation, or vice versa, the starting point for most cases will be the relevant treaty or conventions to which the countries at issue are signatories. The applicability of the treaty or convention provisions varies among signatories and must be determined and alternative methods for obtaining evidence should be considered. For example, in light of the general estimates of time for obtaining the requested information through the Letter Request process of the treaty or convention, managing counsel should explore whether a properly and carefully crafted letter rogatory request based on comity between the U.S. court as the requesting court and the receiving court, such as the High Court in the UK, might accelerate the process.

Significantly, the ability of cross-border litigants to obtain testimonial evidence can be driven as much by the relations between the countries, especially on the issue of reciprocity of judgments, as it is by the treaty or convention terms or the particular civil judicial procedures followed in that jurisdiction. The antipathy of international judicial systems to what is considered intrusive U.S.-styled litigation (and reciprocity in the recognition of U.S. judgments) can make its presence known in unanticipated ways.

Therefore, counsel managing cross-border litigation should first review the information available with the Department of State, Office of Consular Services for broad-stroke guidance. See http://bit.ly/2pdpuz2. Identifying and conferring with local counsel who have sophisticated litigation experience and familiarity with U.S. legal practice is invaluable. This will provide the necessary common ground for helpful discussions. Even in countries where there are great perceived affinities among the respective judicial systems, nothing should be taken for granted.

Common Law

Although the UK shares a common-law system with the U.S., and the two jurisdictions have a long history of mutually recognizing and enforcing their respective judgments, the UK is scrupulous, as a matter of statute and judicial temperament, about determining whether a UK company actually submitted itself to the jurisdiction of a U.S. court before recognizing any judgment against a UK company. See U.K. Companies Act 2006. Further, the differences in the practices of law and judicial procedures in the U.S. and UK, based on differing traditions and public policies, have resulted in a wide divergence of views as to the scope of permissible document discovery in civil proceedings.

This divergence can have an impact on the amount of cooperation provided, in particular with the scope of discovery when U.S. litigants seek evidence from a UK non-party resident or UK defendant with respect to such matters as taxes and other financial information.

The impact, if any, of the UK's membership and its current steps to exit from the EU on the process and procedures for gathering evidence obviously should be explored. Therefore, counsel managing cross-border litigation should discuss with expert outside counsel potential admissible evidence-gathering issues early in the litigation in order to develop a better understanding of the likely impact these restrictions may have on both the budget for the matter and the ability to meet the objectives of the client.

Some "details" can change the entire course of a case. For example, U.S.-style depositions can be arranged and conducted in the UK. Significantly, as permitted under the terms of the Hague Convention on the Taking of Evidence Abroad in Civil or Commercial Matters, some commonplace but important aspects of U.S. depositions may not apply under the rules in the UK.

Anticipating a contentious deposition of a solicitor in London a few years ago, we sought the appointment of a Queen's Counsel, sometimes referred to as a barrister who has "taken the silk," to preside over the deposition and rule on objections. Opposing counsel failed to anticipate that the scope of authority for the presiding Queen's Counsel appointed by the Queen's Bench Division of the High Court would include ruling on objections to questions seeking potentially attorney-client privileged communications and any resultant instructions by counsel not to answer. Our argument on the privilege objection, including the use of pertinent UK case law provided to us by a barrister we had instructed, was successful and the witness was instructed to provide the answer to that and a series of follow-up questions. The dispute was amicably resolved shortly thereafter.

Civil Code in Latin America

The taking of testimonial evidence under the Civil Code in most Latin American countries is quite different. Certain countries will permit counsel to swear witnesses before consular officers and take depositions in U.S. embassies using U.S. rules and court reporters. Such depositions will be necessarily limited to witnesses who voluntarily appear. The arrangements for such depositions require time-consuming coordination with the embassy, and usually long lead times, on top of the time required to make agreeable arrangements with opposing counsel.

On the other hand, some countries object to any witness being placed under oath and examined anywhere within the country except by a judicial officer, and treat a violation as a criminal offense. The State Department Office of Consular Services lists those countries. Enforcement of such laws restricting the swearing of witnesses and taking testimony varies from country to country. Local counsel must be consulted and, given the advances in technology, the swearing of witnesses and taking testimony may be possible. For example, we were able to make arrangements for voluntary witnesses to appear in the office of a Notary Public in their resident Latin American country. After being sworn by both the local notary and a U.S. notary, the witnesses testified via Skype and video-conference connections directly in an evidentiary hearing for a preliminary injunction. The translator and court reporter were in the courtroom in the U.S.

Obtaining testimony from a witness who will not voluntarily appear either in the U.S. or in his or her resident country is a much more difficult process. In that case, resort to the judicial power of the courts in the jurisdiction where the witness resides, either through the Hague Convention on the Taking of Evidence Abroad in Civil or Commercial Matters, or the Inter- American Convention on Letters Rogatory for many Latin American countries. A significant consideration, beyond the time and effort necessary, is whether the U.S. Court will accept the testimony obtained by the court, especially a court in a Civil Code jurisdiction, for anything more than an affidavit used in connection with motion practice or with a summary judgment.

Typically, the witness appears in the court for examination on written questions that may be conducted by the judicial clerk instead of the judge. Counsel for the parties, admitted to practice before that court, generally are not permitted to ask questions themselves during the taking of testimony, but may be permitted to request follow-up questions beyond those specifically contained in the request for judicial assistance (or letter rogatory) or any questions posed by the clerk or the court at that time on the court's own initiative. There is no assurance that a verbatim transcript will be made. Rather, if any extensive statement is made by the witness to a particular question, the clerk will make a summary of the response.

This summary, in question-and-answer form, will be what is transmitted back to the requesting court through the relevant judicial assistance process set up by treaty between the two countries. There is also the real possibility that opposing parties will have vetted and helped prepare the response to the written questions provided by witnesses sympathetic to their case.

Documents and Parallel Litigation

Civil litigation in most Civil Code countries is conducted virtually exclusively in writing. A complaint must attach and refer to the written evidence compiled by counsel for the plaintiff. Motions and requests for relief must be in writing, with all the relevant documents to be considered by the court attached. This requires a huge amount of attorney time in preparation and review of documents, and judicial labor in examining the filings and ruling.

As a consequence, the authenticity of documents is very strict, especially with respect to copies of documents. Unlike U.S. authentication rules and practices, some Civil Code jurisdictions have very exacting technical rules on the admissibility of documents, including the presentation of summaries or testimony, and will not accept anything other than an original document, or the original underlying documents supporting a figure in a financial report. Counsel managing cross- border litigation seeking relief in a jurisdiction outside of the U.S., or coordination with actions taken in U.S. proceedings, should gain an early understanding of such evidentiary issues in order to properly plan a strategy to reach the client's objectives.

Defendants in Civil Code countries meet the complaint with technical arguments about the claim, with counter assertions supported by documents they have compiled, and with many attacks on the authenticity of the plaintiffs' materials. Oral argument is very rare and is generally no more than a judicial question-and-answer exercise. In the absence of the common law approach to legal questions, there frequently is little or no legal precedent in the form of a reported decision to guide the courts. The Civil Code courts rely on the statutory provisions and look to well-regarded legal treatises by legal scholars for support. The process can be very slow, even with the most diligent and professional of judges.

Counsel managing cross-border litigation need to appreciate these and other practicalities of the practice of law in other countries, especially when there are parallel litigations. For example on the macro level, fraud claims that would be only a civil matter in the U.S. are treated as criminal matters in Civil Code countries and may be brought only by a prosecuting or state attorney. Therefore, care must be taken in planning, through assessing the pros and cons of bringing such a claim, with all of its complexity, into what in the U.S. would be a civil dispute.

On the micro level, the U.S. system for service of motions and filings on opposing counsel by mail, fax, hand delivery or electronically, is not followed in a number of Latin American countries. For example, in Argentina, everything is filed only with the clerk of the court without any notice to any opposing party.

In the absence of any electronic docketing system, it is up to counsel to send someone to the courthouse (and to the particular room manned by the clerk holding that file) to review the physical file on a weekly (or more frequent) basis for anything filed by the opponent, or rulings or requests by the court. A log is maintained by the clerk on a daily basis, showing when each file was reviewed and by whom. If, for any reason, the file is not diligently requested and reviewed, there can be significant consequences in a matter. The failure to review the court file, as reflected in the clerk's log, and to comply with any time-sensitive order of the court, is no excuse for non-compliance.

In Latin American countries, Notary Publics play a significant role in creating the records and recording real estate transactions, agreements, settlements of dispute or wills that are frequently central to any significant litigation. Many of the documents that litigants depend upon to prove their case, either in that jurisdiction or in proceedings in the U.S., may be found in the records of a Notary Public. In most Civil Code countries, the Notary trains as a lawyer, but must choose whether to become a licensed lawyer or a notary; he or she cannot be both. In other jurisdictions, for example in Puerto Rico, a lawyer can serve in both roles.

Generally, the position of a Notary Public holds much more weight and responsibility than in the U.S. For example, they collect taxes on real estate transactions and affix stamps reflecting same on the transaction documentation quoted and recorded in specially numbered books. There is a system of "private" and "public" documents that will determine whether and how any litigant can access such information.

Statements under oath may be prepared and recorded by the Notary Public, remain unknown to certain parties (until the worst moment) and have a huge impact on the disposition of a proceeding. The Notary Public system is complicated and tradition-driven, having been developed over centuries of laws and practice. Counsel managing cross-border litigation, or seeking to obtain evidence from Civil Code countries with a Notary Public system, should explore with sophisticated local counsel early on how the structure and even nuances of the system might impact case strategy and plans.

Conclusion

Cross-border litigation is complex and expensive. In order to avoid surprises and plan successfully, counsel managing such litigation should engage expert outside counsel in a comprehensive discussion of the practicalities of obtaining and using evidence that may impact the case. Curiosity about how the legal system functions will aid in the development of proper plans to increase the likelihood of reaching desired results. When managing counsel becomes familiar with the legal processes in the foreign country, and the devil in the details of that system, the opportunity to develop creative solutions or to avoid pitfalls will markedly improve.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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