The taking of evidence abroad - recent developments in criminal procedure and international arbitration from a practitioners’ perspective
Often the outcome of a case depends on whether the party bearing the burden of proof can establish the factual basis for the requested relief. To do so, the party must prove the elements of the legal basis that the relief is relying on. The taking of evidence therefore plays a crucial role in international procedural law. Where evidence is not freely accessible (e.g. a witness refuses to appear before court or a document is withheld), the assistance by courts and other governmental bodies becomes important. The process is straightforward when the evidence is in the country in which the proceedings take place. However, complex issues may arise when the evidence is located abroad. This is because the taking of evidence involves the exercise of sovereign rights and powers and this is limited to the territory of the respective court or governmental body. Effective taking of evidence therefore requires cooperation between states on an international level. This is the case for both civil and criminal proceedings.
The taking of evidence abroad is regularly discussed in the context of civil litigation. In this article, we will look at recent developments in two other fields. We will give an overview on recent changes in the field of criminal procedure, and will comment on a landmark decision of the US Supreme Court in which the Court decided on whether US federal courts are competent to provide their assistance in the taking of evidence for arbitrations with seats outside the United States.
Increasing international cooperation in criminal proceedings
Cross-border crime, understood as those activities that affect persons or take place in the territory of more than one state, has long been a concern and preoccupation of the international community. This has been exacerbated with the spread of new technologies and their implications in terms of globalisation. This reality calls for new instruments of cooperation in criminal matters, aimed at stopping criminals who seek to benefit from the territoriality of criminal law and from the monopoly of each state’s ius puniendi (right to punish). The collection of evidence in other states for its use in criminal proceedings is key in dealing with this type of crime. Examples include the temporary transfer of detainees for investigative purposes; the gathering of personal evidence consisting of the testimony by videoconference of an investigated person, witness or expert; controlled deliveries; the creation of joint investigation teams; and undercover investigations.
Within the EU, the principle of mutual recognition of judicial decisions has been the cornerstone of judicial cooperation in criminal matters since the Tampere Council in 1999. Subsequently, Article 82 of the Treaty on the Functioning of the European Union was based on this principle. Precisely one year later, in July 2000, the Convention on Mutual Assistance in Criminal Matters was approved to speed up coordination between member states based on mutual trust. This model of cooperation updated the Convention on Mutual Assistance in Criminal Matters signed in Strasbourg in 1959 within the Council of Europe. The 1959 Convention designed a system whose main instrument was the so-called “rogatory commission”, establishing specific grounds for the refusal of a request for judicial assistance and specific requirements to condition its practice in some cases. However, except for reasons of urgency, rogatory commissions were channeled through the central authorities and this remains the case today.
The 2000 Convention opted for a more efficient system. It replaced communication between central authorities with direct communication between judicial authorities, removing the principle of dual criminality for a list of offences and establishing a list of specific grounds for refusal. The principle of dual criminality previously requested that the facts under investigation should be considered a crime in both countries. With the same spirit of facilitating cooperation between member states, forms or certificates were introduced as way to promote mutual assistance. In this regard, Directive 2014/41/EU of the European Parliament and of the Council which regulates the European Investigation Order in Criminal Matters (EIO) was adopted and is currently considered as the only instrument for obtaining cross-border criminal evidence in the EU. The EIO includes all types of investigative measures (except for the creation of a joint-investigation team and the collection of evidence for such a team), including measures involving the collection of evidence in real time, on a continuous basis or for a certain period of time. There is also Regulation (EU) 2018/1805 of the European Parliament and of the Council on the mutual recognition of seizure and confiscation orders which is relevant in the context of obtaining cross-border evidence. This regulation allows the enforcement of a seizure or confiscation order without verification of the dual criminality of the facts for a list of crimes under the terms set forth in its Article 3.
In Spain, Directive 2014/41/EU was embodied into Law 3/2018, which modifies Law 23/2014, on the mutual recognition of criminal decisions in the European Union. Law 23/2014 is the exponent of the new model of judicial cooperation within the framework of the area of freedom, security and justice of the EU. It regulates the different instruments of mutual recognition including the European arrest warrant and surrender, which is the order of preventive seizure of assets or of confiscation, and the aforementioned EIO. Note that in relation to the EIO, the Spanish legislator, as in many other European countries, gives a leading role to the Public Prosecutor’s Office. It considers the office the competent authority for issuing the EIO, provided that the measure does not limit fundamental rights, together with the judges or courts hearing the criminal proceedings. When the measures do restrict fundamental rights, it also gives the competent authority exclusive consideration whether or not to receive the EIOs issued by the competent authorities of other member states, whose enforcement will be carried out by judges and courts.
Within the European Union there is a legal framework prepared to deal with cross-border crime, with mutual recognition instruments that allow legal practitioners to obtain evidence from other states. In non-EU countries, mutual recognition will depend on the international treaties that may exist on a case-by-case basis.
A backlash in arbitration?
International cooperation has also been steadily increasing in civil procedure. The Brussels Convention of 1968, the Lugano Conventions of 1988 and 2007 and the Brussels Regulations of 2001 and 2012 1 are testaments to this development on the European level. Beyond Europe, the Hague Convention on Private International Law has played an important role in fostering the cooperation of states in civil matters, notably in the taking of evidence. 2
While there is a trend for international cooperation in civil matters, the trend in arbitration has been to limit judicial activity for the sake of party autonomy. Nevertheless, most arbitration laws provide that the arbitral tribunal and/or the parties may apply for assistance by national state courts in the collection of evidence. The reason for such provisions is that arbitral tribunals derive their authority from a contract between the parties and thus lack authority vis-à-vis third parties and cannot enforce their orders. For instance, Article 27 of the UNCITRAL Model Law provides that the arbitral tribunal or a party with the approval of the arbitral tribunal may request assistance in taking evidence from a competent court of the state in which the arbitration is seated. The court may execute the request within its competence and according to its own rules on taking evidence.
However, court assistance need not necessarily stop at the boundaries of the country where the arbitration is seated. In the US, for example, several Courts of Appeal took the view that 28 U.S.C. § 1782 (“§ 1782”) allowed parties in arbitrations seated outside the US to apply for assistance by federal courts in the taking of evidence. By contrast, other Courts of Appeal objected to this view, holding this provision inapplicable to arbitral tribunals. In view of this circuit split, the US Supreme Court granted certiorari to two cases raising the question whether federal courts were competent to provide judicial assistance to arbitrations seated abroad. One case concerned a post M&A dispute to be decided by an arbitral tribunal in Germany. The other arose out of an investor-state arbitration under UNCITRAL Arbitration Rules based on the Latvia-Russia bilateral investment treaty (“BIT”).
In its judgment in ZF Automotive, Inc. et al. v. Luxshare, LTD 3 ., the US Supreme Court decided that parties in an arbitration seated outside the US are not entitled to assistance in the taking of evidence under § 1782 as they do not qualify as “international tribunals” within the meaning of the statute. The Court based its unanimous decision on a verbal, historic and systematic interpretation of the statute. While the Court admitted that the wording of the statute is ambiguous, it stressed that arbitral tribunals lack governmental authority. The Court further held that Congress adopted § 1782 in support of international comity and to strengthen the cooperation between the US and other states. In the Court’s view, this excludes arbitral tribunals who derive their powers from a contract, including tribunals in investor-state arbitration under the UNCITRAL Rules based on a BIT. From a policy perspective, the Court observed that applying § 1782 to arbitrations would undermine the parties’ implied agreement on limited access to discovery proceedings.
The decision of the US Supreme Court is of practical importance since § 1782 applications had become a tool frequently used in arbitrations with connections to the US. It is a matter of perspective whether the decision by the US Supreme Court is seen as a strengthening of arbitration as an autonomous dispute resolution mechanism or as a backlash in the cooperation between states in international procedural law.
In any event, as the above developments show, the taking of evidence in an international context requires a holistic view and in-depth knowledge of the applicable rules in the relevant jurisdictions, not only the place of the proceedings.
