Foreign Banking Information Held to be Discoverable Despite Blocking Statute

03/11/2010 12:46

In the world of discovery, whether electronic or traditional, a central point of contention is whether documents have to be produced.  In a recent case, the Southern District of New York considered whether a third-party had to produce information under a subpoena when the information is in a foreign country that has a Blocking Statute that clearly prevents the disclosure.  In Gucci Amer., Inc. v. Curveal Fashion, the plaintiffs sought information from third-party United Overseas Bank's New York Agency ("UOB") pursuant to a court order to liquidate defendant's assets to fulfill a judgment.

The information at issue was in a foreign bank account in Malaysia and therefore protected from production by a Malaysian Blocking Statute that prevented the release of the banking records.  UOB, according to its own analysis, could not release the records.  Moreover, UOB enlisted the assistance of Malaysian counsel which agreed and submitted legal opinion to the Court in support of UOB's position.

The Court considered the evidence and the foreign law and ultimately applied a balancing test of five factors set out in the Restatement (Third) of Foreign Relations Law of the United States:

  1. the importance of the documents or information requested to the litigation;
  2. the degree of specificity of the request;
  3. whether the information originated in the United States;
  4. the availability of alternative means of retrieving the information; and
  5. the extent to which noncompliance with the request would undermine the important interests of the United States.

The Court determined that factors 1,2, 4 and 5 weighed in favor of requiring production of the information and stated, "(i)n sum, the documents are vital to the litigation, the requests are direct and specific, the documents are not easily obtained through alternative means, the interest of the United States outweighs that of Malaysia under the circumstances, and the likelihood that (UOB) would face civil or criminal penalties is speculative.  Although (UOB) has acted in good faith, and the documents are located abroad, this is insufficient to overcome those factors weighing in favor of disclosure."

This is an interesting case that helps to define what information will be required to be produced by parties and non-parties.