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Peter S. Selvin
 Jurisdictional Discovery Against Foreign PartiesA recurring problem in international litigation is the extent to which foreign parties, who have been sued in the United States, can be subjected to U.S.-style discovery, where those parties have objected to the Court's exercise of personal jurisdiction over them. This problem is important because it illustrates a Catch-22 for U.S. plaintiffs who seek to have the Court exercise personal jurisdiction over foreign defendants: on the one hand, a U.S. plaintiff will frequently need to conduct discovery to establish the jurisdictional facts necessary to overcome a foreign defendant's motion to dismiss; on the other hand, the foreign defendant will argue that until and unless the Court has determined that personal jurisdiction exists, it should not be compelled to respond to discovery authorized by a U.S. Court, especially where such discovery would not be allowed in its home forum. At the threshold, it is settled law that a U.S. Court has the discretion to allow discovery concerning jurisdictional facts in a case where a foreign defendant contests the Court's exercise of personal jurisdiction. See, e.g., America West Airlines, Inc. v. GPA Group, Ltd., 877 F.2d 793, 801 (9th Cir. 1989), citing Wells Fargo & Co. v. Wells Fargo Express Co., 556 F.2d 406, 430-31, n. 24 (9th Cir. 1977). At the same time, however, discovery will not be allowed where the pertinent facts bearing on the question of jurisdiction are not in dispute (H2O Houseboat Vacations, Inc. v. Hernandez, 103 F.3d 914, 917 (9th Cir. 1996)) or where the development of additional facts would not affect the outcome of the Court's jurisdictional determination (Razore v. Tualip Tribes of Washington, 66 F.3d 236, 240 (9th Cir. 1995)). In circumstances where a U.S. court determines that jurisdictional discovery will be allowed as to a foreign defendant who has contested the court's exercise of personal jurisdiction, an important question frequently arises: whether a U.S. plaintiff will be permitted to invoke the discovery procedures available under U.S. law or whether the plaintiff must instead proceed only via the Hague Convention or other bilateral agreement governing the production of evidence overseas. As to foreign defendants over whom it has been determined that the Court has personal jurisdiction, the answer was provided by the U.S. Supreme Court in SocietŽ Nationalle Industrielle Aerospatiale v. United States District Court, 482 U.S. 522 (1987). In that decision, the Court held that U.S. plaintiffs are not required to proceed exclusively via the Hague Convention in obtaining the production of evidence overseas, even in circumstances where the production of evidence which is sought may potentially put the foreign defendant in conflict with the law of its forum. In the Societé Nationalle decision, the U.S. Supreme Court admonished U.S. District Courts to proceed on a case by case basis in determining the application of the Hague Convention, and warned that special concern must be given to the prevention of discovery abuse and the demands of international comity. Id. at 546-547. In Societé Nationalle the Supreme Court did not address, however, whether the application of the Hague Convention becomes mandatory where the foreign defendant contests personal jurisdiction and the U.S. court has not yet made a determination on that issue. In such circumstances, international comity would seem to favor mandatory application of the Hague Convention. Although the U.S. Supreme Court has not squarely addressed this issue, lower courts have. In Geo-Culture, Inc. v. Siam Investment Management, 147 Or.App. 536, 936 P.2d 1063 (1997), a U.S. plaintiff brought suit against HBZ Finance Limited (HBZ), a company based in Hong Kong. Arguing that the Oregon court lacked personal jurisdiction over it, HBZ moved to dismiss the complaint. In response, the plaintiff sought an order from the court allowing it to take a telephonic deposition of HBZ to discover the pertinent jurisdictional facts. The trial court ruled that plaintiff could take discovery from HBZ concerning the pertinent jurisdictional facts, but only, at least initially, in accordance with the Hague Convention. The trial court "reserved" for later determination whether the U.S. plaintiff could utilize U.S. discovery rules and procedures in connection with his jurisdictional discovery. Faced with the requirement that it proceed with jurisdictional discovery, if at all, solely in accordance with the procedures described in the Hague Convention, the plaintiff elected to simply respond to the HBZ's motion to dismiss Ñ without proceeding with such jurisdictional discovery. The Oregon court granted HBZ's motion to dismiss, and the plaintiff appealed. On appeal, the plaintiff argued, among other things, that the trial court erred in requiring it to proceed, at least initially, solely in accordance with the requirements of the Hague Convention. Without reaching the international comity issues identified by the Court in Societé Nationalle, the Oregon Court of Appeals affirmed the lower court's determination that the plaintiff would be permitted to undertake jurisdictional discovery, at least initially, solely in accordance with the Hague Convention. 936 P.2d at 1067. It is significant that the decision in Geo-Culture appears to be the only U.S. decision which in recent years has limited in this way the means by which jurisdictional discovery of a foreign party can be taken. Numerous cases decided by the federal courts go the other way. See, e.g., Fishel v. BASF Group, et al., 175 F.R.D. 525, 528 (S.D.Iowa 1997) ("The Court does not believe plaintiff is limited to the Hague Evidence Convention until the Court rules on the personal jurisdiction issue"); Rich v. KIS California, 121 F.R.D. 254, 258 (M.D.N.C. 1988); Jenco v. Martech International, Inc., 1988 US Dist. LEXIS 3991 (E.D.La. 1988). Those courts which have not adopted the limitation articulated in Geo-Culture have required that foreign defendants respond to discovery directed toward jurisdictional issues, without regard to plaintiff's compliance with the procedures specified in the Hague Convention. In such circumstances, a foreign party may be tempted to refuse to provide such discovery on the theory that, absent compliance by the U.S. plaintiff with the Hague Convention's procedures, it cannot be compelled to respond to such discovery. A U.S. Supreme Court decision on this point, however, should give pause to a foreign party contemplating such a step. In Insurance Corp. of Ireland, Ltd. v. Compagnie des Bauxites de Guinea, 456 U.S. 694 (1982), the Court concluded that a U.S. Court can make a finding on personal jurisdiction over a foreign defendant as a sanction for that defendant's refusal to respond to jurisdictional discovery. In that case, the U.S. Supreme Court affirmed the issuance of such a sanction against a group of foreign defendants who refused to comply with certain court-ordered discovery. The discovery in question represented an attempt on the part of the plaintiff to establish jurisdictional facts, in response to the foreign defendants' defense based on lack of personal jurisdiction. The holding in Insurance Corp. of Ireland stands for the proposition that a foreign defendant who asserts a defense based on lack of personal jurisdiction will nonetheless be obliged to respond to discovery concerning jurisdictional facts, even if that discovery is not propounded in accordance with the Hague Convention's rules and procedures. The sanction for the failure of a foreign defendant to respond to such discovery may be an adverse finding on the issue of personal jurisdiction itself. Peter S. Selvin is a partner and Patrick Gunn is an associate in the firm of Loeb & Loeb LLP in Los Angeles. |