As has been reported in this blog, the issue of whether the application of 28 USC § 1782 extends to private commercial arbitration is due to be decided by the United States Supreme Court.
The recent case Second Circuit case of The Federal Republic of Nigeria v. VR Advisory Servs., 2022 WL 320211 (February 3, 2022) presents a new wrinkle in the use 28 USC §1782
Nigeria sought discovery from VR Advisory Services (VS) for use in criminal proceedings in Nigeria related to the allegedly fraudulent procurement of a public-utility contract. The district court initially granted the §1782 application. The court, however, later vacated the order, holding that the third Intel factor, “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,” “merit[ed] the greatest weight” and “strongly counsel[ed] against authorizing” the requested discovery.
The trial court reasoned that Nigeria’s application constituted an attempt to “circumvent” procedures laid out in the treaty between the United States and Nigeria providing for mutual legal assistance in criminal matters. (“MLAT”). A MLAT is an agreement between two sovereigns to provide assistance in criminal matters where evidence, persons, or property potentially useful to one sovereign’s prosecutors may be found within the other’s jurisdiction. Nigeria is one of many countries with a MLAT with the United States.
In reversing and remanding the trial court, the Second Circuit focused on the word “circumvent” noting that something that is “circumvented” must be an obstacle that one ordinarily expects to encounter. By analogy, the court stated:
If there are two equally valid means to the same end and neither is meant to restrict use of the other, the choice of one over the other is not “circumvention.” For example, if two trains run from Lagos to Abuja but one makes fewer stops along the way and therefore completes the journey in less time, a passenger who chooses the faster express train has not “circumvented” the slower local.
Thus reasoned the court, in the context of § 1782 and the third Intel factor, circumvention occurs where the applicant uses a § 1782 application to avoid measures that are intended to restrict certain means of gathering proof.
Finding Nigeria did not “circumvent” any relevant restriction or policy within the meaning of Intel by filing an application under § 1782 as opposed to a MLAT request, the court held that the district court based its decision on legal error, thereby exceeding the bounds of its discretion and ordered remand.