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November 05, 2019 Practice Points

U.S. Discovery Not Available in Foreign Enforcement Proceeding

The court ruled that all statutory requirements for 28 U.S.C. §1782 were not satisfied.

By Mitchell L. Marinello

28 U.S.C. §1782 permits U.S. district courts to authorize certain persons to take discovery in aid of foreign proceedings. In re Petition of Galaxy Energy and Resources Co. Pte. Ltd. No 19-MC-0287-LTS (July 1, 2019) addressed a petition for discovery to help a party enforce an arbitration award through legal proceedings in Singapore. 

The case arose from a contract dispute between two commodity traders, Galaxy Energy and Resources Co. Pte Ltd. (Galaxy) and Mohammad Saidur Rahman (Saidur). In January 2019, an arbitration tribunal in Singapore issued an award in favor of Galaxy and against Saidur for about $1.2 million. Galaxy informed the court that Saidur had not paid the award and that it had initiated or would initiate enforcement proceedings in Singapore and other jurisdictions to try to enforce the award. Galaxy asked for discovery from banks located in New York which it believed might have assets belonging to Saidur.

The district court noted that section 1782 permits U.S. district courts to authorize certain persons to take discovery in aid of foreign proceedings when: (1) “the person from whom discovery is sought resides” in this district; (2) “the discovery is for use in a foreign proceeding before a foreign tribunal”; and (3) the application is made by an “interested person” or a foreign tribunal. 

The court stated that Galaxy satisfied the first and third requirements of section 1782, because the banks from which it sought discovery are located in New York and Galaxy is an interested person in the contemplated foreign (Singapore) legal action. It ruled that Galaxy did not satisfy the second statutory requirement, however, because the contemplated proceedings in Singapore did not qualify as a foreign proceeding. The court explained that a legal action qualifies as a foreign proceeding only if it is an adjudicative proceeding. Here, the merits of the parties’ contract dispute had already been decided, and Galaxy was seeking to enforce the resulting award. The court held that such enforcement proceedings are not adjudicative, and the court therefore did not have authority under 1782 to permit Galaxy to take discovery. Accordingly, the court denied Galaxy’s petition.  

Mitchell L. Marinello is a partner at Novack and Macey LLP in Chicago, Illinois.

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