Victory Update: Foreign Parties Can Use U.S. Court To Obtain Documents Located Abroad

Since 1964, an American federal statute—28 U.S.C. § 1782—has empowered the United States courts to permit discovery from persons who “reside” or are “found” in the United States for use in judicial and arbitral proceedings outside of the United States. However, whether an applicant can use Section 1782 to obtain documents located abroad has been an unsettled issue in the Second Circuit. Last week, the Second Circuit in In re del Valle Ruiz resolved this issue by confirming that “there is no per se bar to the extraterritorial application of § 1782” and affirming the lower court’s decision allowing two American participants in foreign proceedings (both represented by Quinn Emanuel) to obtain extraterritorial discovery from a New York-based banking entity. The decision in this case resolves significant uncertainty regarding the scope of discovery available under the statute, and reaffirms the utility of Section 1782 as a discovery device for litigants in jurisdictions with more limited evidence-gathering procedures.

The case arose in connection with the June 2017 forced sale of Banco Popular de Español, S.A. (“BPE”) to Banco Santander, S.A. for one Euro, an event that has resulted in criminal, civil, and arbitral proceedings in a variety of jurisdiction. To aid those proceedings, certain interested parties (represented respectively by Quinn Emanuel and Kirkland & Ellis) filed applications for discovery in the Southern District of New York from Banco Santander and its New York-based affiliate, Santander Investment Securities Inc. (“SIS”). Although the district court denied the application with respect to Banco Santander itself, it permitted discovery from SIS, and it specifically rejected the argument that such discovery should be limited to documents located in the United States.