1:19-mc-00593
S.D.N.Y.Nov 30, 2020Background:
- Gulf Investment Corporation (GIC), a Kuwait-state-owned investor and limited partner in The Port Fund L.P. (a Cayman Islands private equity fund), alleges discrepancies and potential misappropriation following the 2017 sale of the Port Fund’s Clark Global City asset in the Philippines.
- Public filings suggested a ~$1 billion sale price while the Port Fund reported $496 million; proceeds were transferred to a Port Link account in Dubai, frozen by UAE authorities, and later partially released; only $305 million was distributed to limited partners and GIC received $25.4 million.
- GIC sought an ex parte order under 28 U.S.C. § 1782 to subpoena documents from twelve correspondent banks in the Southern District of New York and other service providers to investigate alleged misconduct (discrepancies in sale reporting, possible misappropriation to advisors/lobbyists, conflicted advisors, and related-party transactions) for use in contemplated Cayman Islands litigation.
- The Port Fund moved to intervene and opposed the § 1782 application; the Court granted intervention and considered briefing and oral argument.
- The Court denied the § 1782 application because GIC failed to show the requested discovery was “for use” in a foreign proceeding that was within reasonable contemplation at the time of filing — GIC did not present sufficient objective indicia of a concrete, contemplated Cayman proceeding or describe legal theories until its reply.
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether § 1782’s "for use in a foreign proceeding" requirement is satisfied (is litigation within reasonable contemplation?) | GIC: has been investigating alleged misconduct, retained Cayman counsel, intends to pursue Cayman litigation to recover missing funds. | Port Fund: GIC seeks discovery to investigate whether to sue; filings are speculative, lack concrete indicia or articulated legal theories; too little at time of filing. | Denied — GIC failed to show litigation was within reasonable contemplation when the § 1782 application was filed; allegations and later assertions (J&E winding-up petition) were insufficient and untimely. |
| Whether Court should exercise discretion under Intel factors to grant discovery | GIC: Intel factors would support relief (non-parties, likely receptivity, need for documents). | Port Fund: even if Intel factors considered, statutory defect is dispositive; burden and circumvention concerns exist. | Court did not reach the Intel-factor analysis because the statutory "for use" requirement was not met. |
Key Cases Cited
- Intel Corp. v. Advanced Micro Devices, Inc., 542 U.S. 241 (establishes §1782 discretionary factors and "reasonable contemplation" concept)
- Mees v. Buiter, 793 F.3d 291 (interpreting §1782 statutory prerequisites)
- Brandi-Dohrn v. IKB Deutsche Industriebank AG, 673 F.3d 76 (§1782 statutory framework in the Second Circuit)
- Certain Funds, Accounts &/or Investment Vehicles v. KPMG, L.L.P., 798 F.3d 113 (requires objective indicia that foreign proceeding is reasonably contemplated)
- Kiobel by Samkalden v. Cravath, Swaine & Moore LLP, 895 F.3d 238 (discusses timing and indicia for contemplated foreign proceedings)
- In re del Valle Ruiz, 939 F.3d 520 (confirms statutory requirements are jurisdictional)
- Schmitz v. Bernstein Liebhard & Lifshitz, LLP, 376 F.3d 79 (preference for narrowly tailored discovery)
- In re Metallgesellschaft AG, 121 F.3d 77 (district court discretion to grant §1782 discovery)
- In re Sargeant, 278 F. Supp. 3d 814 (using sought evidence merely to assess whether to initiate litigation is insufficient)
- In re Microsoft Corp., 428 F. Supp. 2d 188 (analysis of foreign tribunal receptivity and burden on opponent to show non-receptivity)