In Re: The Petition of Asia Maritime Pacific Ltd.
Filing
4
OPINION AND ORDER: Petitioner's request for discovery pursuant to 28 U.S.C. § 1782 is DENIED. The Clerk of Court is requested to terminate this action. (As is further set forth in this Order.) (Signed by Judge Valerie E. Caproni on 8/26/2015) (spo)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
-------------------------------------------------------------- X
:
IN RE: THE PETITION OF ASIA MARITIME
:
PACIFIC LTD. request for discovery pursuant to :
28 U.S.C. § 1782
:
:
-------------------------------------------------------------- X
USDC SDNY
DOCUMENT
ELECTRONICALLY FILED
DOC #:
DATE FILED: 8/26/2015
15-CV-2760 (VEC)
OPINION AND ORDER
VALERIE CAPRONI, United States District Judge:
Asia Maritime Pacific, Ltd. (“Petitioner”), an entity organized under the laws of Hong
Kong, petitioned ex parte, pursuant to 28 U.S.C. § 1782, to obtain discovery from various banks
and investment companies “for use in pending foreign proceedings and for purposes of locating
assets of Arma Shipping & Chartering Co.” (“Arma”). Pet. at 1. Arma is alleged to be “a
trading company with no significant hard assets held in its name.” Su Decl. ¶ 21. Arma failed to
appear in a London arbitration that was commenced by Petitioner seeking damages flowing from
Arma’s alleged breach of a maritime charterparty agreement. Id. ¶¶ 16-17.
Petitioner provided no basis to believe that Arma has ever engaged in a financial
transaction with any particular bank in New York, but the proposed order would permit it to
serve subpoenas on sixteen very large banks that have branches in New York City.1 The
proposed order casts a wide net, directing the banks to produce, essentially, any document that
relates to any financial transaction involving Arma in which the bank was the “originator,
intermediary or beneficiary bank,” as well as “detailed account statements,” and the identity of
1
Petitioner requested that the Court enter an order directed to HSH Nordbank AG, Deutsche Bank AG,
Deutsche Bank Trust Company Americas, Commerzbank AG, UniCredit Bank AG, ING Hank/Internationale
Nederlanden Bank (Belgium), ABN Amro Bank, American Express Bank, Bank of America NA, BNP Paribas,
Citibank NA, HSBC Bank (USA) NA, JP Morgan Chase & Co., Standard Chartered Bank, Bank of New York
Mellon, and Wells Fargo Bank.
persons with authority over any Arma account at the bank, from January 1, 2014, until the date
of the proposed order.
Petitioner apparently believes that if enough large banks search their electronically-stored
information, the identity and location of assets belonging to Arma are bound to surface. The
Court declines to lend its subpoena power to this fishing expedition. The petition is DENIED.
BACKGROUND2
On June 24, 2014, Petitioner and Arma entered into a time charter with regard to the
M.V. London Spirit. Dkt. 3 at 11 (“Su. Decl.”) ¶¶ 4, 6. Arma allegedly breached the
charterparty when it failed to tender the first two installment payments that were due. Id. ¶ 8.
On August 1, 2014, Petitioner issued two notices of lien (one for each overdue installment
payment) directed to Arma, a sub-charter (Horizons Overseas SA c/o Atlantic Shipping Athens
(“Atlantic Shipping”)), and a sub-sub-charterer (Safe Express Shipping Co., Ltd. (“Safe
Express”)), notifying each party that Petitioner was asserting its right to exercise a lien over “all
cargoes and sub-freights, hire, demurrage and/or detention for any amounts due” Petitioner and
requesting that the recipients make arrangements to pay Petitioner. Id. ¶ 9. None of the parties
heeded either notice. Id. On August 10, 2014, Petitioner exercised its right to withdraw the
vessel in Lianyungang, China. Id. ¶ 12. The vessel was loaded with cargo destined for Italy,
which Petitioner was obligated to deliver. Id. ¶ 13.
On December 16, 2014, as provided in the charterparty agreement, Petitioner commenced
an arbitration proceeding in London. Id. ¶ 16. When Arma did not respond to the arbitration
notice, on March 11, 2015, Petitioner appointed the sole arbitrator. Pet. ¶¶ 4, 5, 11, 15-17.3
2
The facts are taken from the Petitioner’s submissions.
3
In the arbitration, Petitioner is seeking damages for breach of the charterparty agreement and to recover the
cost of delivering the cargo from China to Italy. Pet. ¶ 12.
2
About a month later, Petitioner commenced this proceeding hoping to identify and locate Arma’s
assets. Id. ¶¶ 21-22. Based on the discovery that it hopes to obtain pursuant to § 1782, Petitioner
contemplates “commenc[ing] actions to seek security through attachment actions in support of
the arbitration proceedings in England, Turkey, and wherever else assets of Arma may be
located.” Id. ¶ 18. Petitioner avers that Turkish law allows pre-judgment attachment of assets.
Su Decl. ¶ 21.
Petitioner seeks discovery from banks located in the Southern District “to identify, in
particular, the location of bank accounts and other assets, the names of vessels on charter for
which [Arma] is or was paying hire or freight, the purchase of bunkers on board such chartered
vessels, and the identity of counterparties receiving and/or making payments on Arma’s behalf.”
Pet. ¶ 21. This information, it asserts, will be used (1) “to identify assets to attach as security in
support of the foreign proceedings to enforce the expected arbitration award and to enforce a
contemplated English High Court Judgment,” id. ¶ 22; (2) in support of claims on the merits
against Atlantic Shipping and Safe Express, to whom unheeded notices of lien were provided, id.
¶ 23;4 and (3) to support a possible indemnity claim against Arma if Petitioner incurs any
liability in connection with its delivery of the cargo to Italy, id.
4
The Su Declaration states that “[d]iscovery of banking information in the United States in relation to
Atlantic Shipping and Safe Express will be used in order to both identify assets of Arma which are subject to
attachment . . . and to illuminate the financial relationships between Arma, Atlantic Shipping, and Safe Express in
support of claims on the merits against Atlantic Shipping and Safe Express.” Su Decl. ¶ 10. The Petition, however,
does not request discovery “in relation to” Atlantic Shipping and Safe Express, but “discovery . . . regarding . . .
information concerning Arma.” Pet. ¶ 26(i). Despite the statement in the Su Declaration that Petitioner seeks
discovery for claims on the merits against Atlantic Shipping and Safe Express, the Petition only requests discovery
related to Arma, which may prove tangentially useful in pursuing potential claims against Atlantic Shipping and
Safe Express.
3
I. LEGAL STANDARD
Pursuant to 28 U.S.C. § 1782, a district court may provide for discovery “for use” in a
“proceeding in a foreign or international tribunal” on the application of any “interested person.”5
“In ruling on an application made pursuant to section 1782, a district court must first consider the
statutory requirements and then use its discretion balancing a number of factors.” Brandi-Dohrn
v. IKB Deutsche Industriebank AG, 673 F.3d 76, 80 (2d Cir. 2012). The three statutory
requirements are that:
(1) the person from whom discovery is sought resides (or is found) in the district
of the district court to which the application is made,
(2) the discovery is for use in a foreign proceeding before a foreign tribunal, and
(3) the application is made by a foreign or international tribunal or any interested
person.
Id.
“Once those statutory requirements are met, a district court may grant discovery under §
1782 in its discretion.” Mees v. Buiter, --- F.3d ---, No. 14-1866cv, 2015 WL 4385296, at *4 (2d
Cir. July 17, 2015). The Court’s discretion, however, “must be exercised ‘in light of the twin
aims of the statute: providing efficient means of assistance to participants in international
litigation in our federal courts and encouraging foreign countries by example to provide similar
means of assistance to our courts.” Id. (quoting Schmitz v. Bernstein Leibhard & Lifshitz, LLP,
5
Specifically, the statute provides:
The district court of the district in which a person resides or is found may order him to . . . produce
a document or other thing for use in a proceeding in a foreign or international tribunal, including
criminal investigations conducted before formal accusation. The order may be made pursuant to a
letter rogatory issued, or request made, by a foreign or international tribunal or upon the
application of any interested person. . . . To the extent that the order does not prescribe otherwise,
the testimony or statement shall be taken, and the document or other thing produced, in
accordance with the Federal Rules of Civil Procedure.
28 U.S.C. § 1782(a).
4
376 F.3d 79, 83-84 (2d Cir. 2004)). In Intel Corp. v. Advanced Micro Devices, Inc., 542 U.S.
241, 264 (2004), the Supreme Court identified four additional discretionary “factors that bear
consideration in ruling on a § 1782(a) request”: (1) whether “the person from whom discovery is
sought is a participant in the foreign proceeding,” in which case “the need for a § 1782(a) aid
generally is not apparent”; (2) “the nature of the foreign tribunal, the character of the proceedings
underway abroad, and the receptivity of the foreign government or the court or agency abroad to
U.S. federal-court judicial assistance”; (3) “whether the § 1782(a) request conceals an attempt to
circumvent foreign proof-gathering restrictions or other policies of a foreign country or the
United States”; and (4) whether the request is “unduly intrusive or burdensome.”
II. DISCUSSION
Petitioner has failed to establish that the discovery it seeks is “for use in a foreign
proceeding” within the meaning of the statute. But even if Petitioner had satisfied the
requirements of § 1782 so that the Court had the authority to grant the request, the Court would
exercise its discretion to deny the petition because this is an overly broad fishing expedition that
does nothing to further the twin aims of the statute. Far from being an efficient means of
assistance to participants in international litigation, the subpoenas would direct sixteen large
banks to conduct broad searches for information when the Petitioner has provided no basis to
believe that Arma ever transacted business through any particular bank. That is too great a
burden to impose on non-parties, particularly on an ex parte basis. The Court seriously doubts
that this is the example Congress intended to set by authorizing discovery pursuant to § 1782.6
6
The Southern District of New York has attracted a number of similar ex parte requests in which the
petitioners are purporting to locate financial information allegedly “for use” in a foreign proceeding but are in reality
seeking discovery to determine whether to initiate a proceeding. See, e.g., In re Harbour Victoria Inv. Holdings Ltd.
Section 1782 Petitions, No. 15-MC-127(AJN), 2015 WL 4040420, at *5 (S.D.N.Y. June 29, 2015) (denying § 1782
request on discretionary grounds because it was “an attempt to evade an unfavorable discovery ruling by another
Judge of this Court or to engage in a fishing expedition to identify other foreign venues in which to bring suit”);
Jiangsu Steamship Co., Ltd. v. Success Superior Ltd., No. 14-CV-9997(CM), 2015 WL 3439220, at *5 (S.D.N.Y.
5
See In re Application for an Order Permitting Metallgesellschaft AG to take Discovery, 121 F.3d
77, 79-80 (2d Cir. 1997).
Petitioner satisfies the first and third requirements of the statute because it is an
“interested person” who “possess[es] a reasonable interest in obtaining [judicial] assistance,”
Intel, 542 U.S. at 256, and the targets of the requested subpoenas are located in this District. The
problem is that the request is not for documents “for use” in a “proceeding before a foreign or
international tribunal.”
“Proceedings in a foreign or international tribunal” include adjudicative proceedings
before foreign courts, administrative and quasi-judicial proceedings, and foreign criminal
investigations. See In re Application for an Order Pursuant to 28 U.S.C. § 1782 to Conduct
Discovery for Use in Foreign Proceedings, 773 F.3d 456, 460-61 (2d Cir. 2014); Intel, 542 U.S.
at 258. The “foreign proceeding need not be pending, so long as it is ‘within reasonable
contemplation.’” Mees, 2015 WL 4385296, at *5 (quoting Intel, 542 U.S. at 259)). A petitioner
satisfies § 1782 by showing that the materials sought will be used at some stage of a foreign
proceeding that is “within reasonable contemplation at the time” of the § 1782 petition. Id.; see
also Intel, 542 U.S. at 258-59 (“It is not necessary for the adjudicative proceeding to be pending
Jan. 6, 2015) (denying a substantially identical § 1782 application made before an arbitration judgment had been
entered was “unreasonably premature” and noting the possibility that the petitioner was “trolling for assets in U.S.
institutions in order to decide whether it [was] worth [its] while to commence a London arbitration in the first
place”); In re Petition of Certain Funds, Accounts, and/or Inv. Vehicles Managed by Affiliates of Fortress Inv. Grp.
LLC, No. 14-CV-1801(NRB), 2014 WL 3404955, at *6 (S.D.N.Y. July 9, 2014), aff’d, --- F.3d ---, No. 14-2838cv,
2015 WL 4939544 (2d Cir. Aug. 20, 2015) (denying request because foreign proceedings not within “reasonable
contemplation” and advising that “Courts must embrace Congress's desire that broad discovery be available for
parties involved in international litigation while also guarding against the potential that parties may use § 1782 to
investigate whether litigation is possible in the first place, putting the cart before the horse.”); but cf. In re
Application of Hornbeam Corp., No. 14-MC-424(VSB), 2014 WL 8775453 (S.D.N.Y. Dec. 24, 2014) (granting
application directed to twelve banks that, in the petitioner’s estimation, were the banks “most likely” to have
“serve[d] as intermediaries for wire transfers of funds,” when petitioner was seeking discovery to support its
potential claim that certain individuals exercised control over the entities that were the subject of the discovery, and
noting that counsel had “represented that the New York Banks routinely receive and comply with similar subpoenas
issued pursuant to 28 U.S.C. § 1782”).
6
at the time the evidence is sought, but only that the evidence is eventually to be used in such a
proceeding.” (alterations omitted)). Assistance under § 1782 is available even if the material will
be used at a stage of the foreign proceeding at which discovery would ordinarily not be available
in domestic litigation. Mees, 2015 WL 4385296, at *6.
Despite the diverse circumstances under which the Court is authorized to grant discovery
“for use in a proceeding in a foreign or international tribunal,” the Second Circuit has made clear
that the requirements of § 1782 are not satisfied by the requesting party reciting some minimal
relation to a pending foreign proceeding. See Certain Funds, Accounts and/or Investment
Vehicles Managed by Affiliates of Fortress Investment Grp. L.L.C. v. KPMG L.L.P., --- F.3d ---,
No. 14-2838cv, 2015 WL 4939544, at *4-7 (2d Cir. Aug. 20, 2015) (petition insufficient because
it failed to establish that the petitioners would be able to use the evidence obtained inasmuch as
they had no procedural ability to submit evidence to the foreign tribunal). An applicant must
show that the evidence will provide it some advantage in the foreign proceeding or be useful in
the proceeding. Id. at *5 (citing Mees, 2015 WL 4385296, at *4). Put differently, discovery is
“for use” in a foreign proceeding if it is relevant to the subject matter of the proceeding, id. at *6,
and the evidence would “increase [the applicant’s] chances of success” in the proceeding, Mees,
2015 WL 4385296, at *4; see also id. at *5 (“seeking discovery to prove one’s claim” in a
pending proceeding “satisfies the ‘for use’ requirement”).7
Petitioner cites one pending “proceeding” – the London arbitration – and four
“contemplated” proceedings to which the requested discovery could relate: (1) a prejudgment
attachment action in Turkey to obtain security for the anticipated London arbitral award
7
A “request that appears only marginally relevant to the foreign proceeding may in certain cases suggest that
the application ‘is made in bad faith, for the purpose of harassment, or unreasonably seeks cumulative or irrelevant
materials,’ [cit.] which would be grounds for a discretionary denial of discovery.” Mees, 2015 WL 4385296, at *4
n.10.
7
(conditioned, of course, on Petitioner’s ability to locate assets in Turkey); (2) enforcement
proceedings in unspecified tribunals (presumably wherever the § 1782 discovery reveals Arma
has assets) to enforce the anticipated London arbitral award; (3) actions in unspecified tribunals
asserting claims against the sub- and sub-sub-charterers that did not heed the Notices of Liens;
and (4) an indemnity action against Arma if Petitioner incurs “cargo interest” in connection with
the cargo delivered to Italy (which would presumably be an arbitration proceeding in England
pursuant to the charterparty arbitration clause). See Pet. ¶¶ 18, 20, 22-23. Fatal to this petition,
Petitioner has failed to show that the materials sought will be of any use in the pending London
arbitration (in which Arma appears to have defaulted) or that the remaining proceedings are
“reasonably contemplated” within the meaning of § 1782.
Petitioner claims that the discovery will be “for use” in aid of the London arbitration
proceeding because the information will be used to identify assets to attach as security for the
arbitrated claims, against which Petitioner will later act in order to satisfy the arbitral award that
it does not yet have, but expects to obtain, against Arma. Pet’r Mem. at 4. Revealingly,
Petitioner does not argue that the requested material could be used in the London arbitration to
some advantage or “used to increase its chance of success” in the arbitration. Rather, Petitioner
seeks the discovery for use in potential collateral proceedings before different tribunals to
“support [its] claims against Arma in the pending London arbitration.” Id. (emphasis added).
Assuming, arguendo, that a private foreign arbitration proceeding is a “proceeding in a foreign
tribunal,”8 Petitioner has not established that the discovery sought is for use in that proceeding.
8
The Second Circuit’s pre-Intel precedent excluded private foreign arbitrations from the scope of qualifying
§ 1782 proceedings. See Nat’l Broad Co. v. Bear Stearns & Co., 165 F.3d 184, 190 (2d Cir. 1999). That precedent
was called into question by dictum in Intel that parenthetically quoted a law review article that included arbitration
proceedings in an illustrative list of “tribunals.” See Intel 524 U.S. at 258; In re Dubey, 949 F. Supp. 2d 990, 993-94
(C.D. Cal. 2013) (listing cases that discuss whether foreign arbitration proceedings are within the scope of § 1782).
Following Intel, it is unclear whether private foreign arbitration proceedings qualify for § 1782 discovery. See
Application of Consorcio Ecuatoriano de Telecomunicaciones S.A. v. JAS Forwarding (USA), Inc., 747 F.3d 1262,
8
Inasmuch as the arbitration proceeding is for Arma’s failure to pay the amounts due under the
charter, it is not intuitively obvious why (nor has Petitioner explained why) the location of
Arma’s assets would be relevant or would increase Petitioner’s chance of success in that
proceeding.
Petitioner has also failed to establish that the evidence sought would be used in a
reasonably contemplated proceeding in a foreign tribunal. To establish that planned proceedings
are within “reasonable contemplation,” “the applicant must have more than a subjective intent to
undertake some legal action, and instead must provide some objective indicium that the action is
being contemplated” at the time the § 1782 petition is filed. Certain Funds, 2015 WL 4939544,
at *8. The proceedings “cannot be merely speculative,” and the burden is not satisfied because
the petitioner has retained counsel and is discussing the possibility of initiating litigation. Id.
“At a minimum, a § 1782 applicant must present the district court some concrete basis from
which it can determine that the contemplated proceeding is more than just a twinkle in counsel’s
eye.” Id.
Even if collateral pre- and post-judgment attachment proceedings are “proceedings in a
foreign tribunal” within the meaning of § 1782,9 the contemplated proceedings here are purely
speculative. Petitioner was unable to locate Arma’s assets through other means prior to making
the present application. Its representation that Arma has “no significant hard assets held in its
name,” Su Decl. ¶ 21, demonstrates that attachment proceedings cannot be commenced unless
1270 n.4 (11th Cir. 2014) (recognizing that Intel called into question the Second and Fifth Circuits’ precedent
excluding private foreign arbitration from § 1782 discovery, but not reaching that issue). The Second Circuit has
not weighed in on the issue. See Chevron Corp. v. Berlinger, 629 F.3d 297, 310-11 (2d Cir. 2011) (declining to
reach the appellant’s argument that an arbitral tribunal established by international treaty is not a “foreign or
international tribunal” within the meaning of § 1782).
9
See Jiangsu Steamship Co., Ltd., 2015 WL 518567, at *2 (pre- and post-judgment attachment proceedings
are not within the scope of § 1782 because they are not adjudicative in nature).
9
discovery reveals that Arma has assets against which Petitioner may proceed. In sum, Petitioner
does not “contemplate” bringing collateral pre- or post-judgment attachment proceedings so
much as it hopes to discover assets against which it can bring a pre- or post-judgment attachment
proceedings.
The “contemplated” actions against Atlantic Shipping and Safe Express are similarly
speculative. The fact that Petitioner is contemplating “the possibility of initiating litigation” falls
far short of an “objective showing” that the proceedings are within “reasonable contemplation.”
Moreover, there is no indication where Petitioner would bring such claims or that the forum
would be “a foreign or international tribunal.” Finally, Petitioner’s hypothetical indemnity
action arising out of liability that may or may not have been incurred when delivering cargo to
Italy is nothing more than pure speculation.
CONCLUSION
Petitioner’s request for discovery pursuant to 28 U.S.C. § 1782 is DENIED. The Clerk of
Court is requested to terminate this action.
SO ORDERED.
___________________________
__
_
__
_
_________________________________
VALERIE CAPRONI
I
United States District Judge
Date: August 26, 2015
New York, New York
10
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?