Tag Archives: Jurisdictional Discovery

NML Capital and FSIA Jurisdictional Discovery

July 25, 2014 By in Discovery Tags: , , , , Leave a comment

Following NML Capital, a significant issue is whether the Supreme Court’s holding applies with respect to FSIA jurisdictional discovery.  Some commentators believe that NML Capital indicates that “lower courts have been too generous in protecting foreign sovereigns from [jurisdictional] discovery requests.”   See Wuerth, Republic of Argentina v. NML Capital: Discovery and the Foreign Sovereign Immunities Act. Although the issue is complex and requires further analysis, this post sets forth my preliminary thoughts.

First, Argentina’s position in the NML Capital litigation was wholly unlike that of a foreign sovereign facing FSIA jurisdictional discovery.  Argentina had previously waived both immunity from jurisdiction and immunity from execution, and the Supreme Court concluded that the FSIA did not confer any immunity over Argentina’s overseas assets.  See The Republic of Argentina v. NML Capital, Ltd. (No. 12-842): Why Both Sides Are Wrong (“NML Article”) at 2-3; see also Republic of Argentina v. NML Capital, Ltd., 134 S. Ct. 2250, 2256, 2257 (2014).  The district court had held that it had subject matter jurisdiction over the action, a conclusion that was uncontested by Argentina.  NML Article at 3.  The district court had entered judgments against Argentina that were indisputably valid.  Id.  Argentina’s position had, in short, no similarities to that of a foreign sovereign that is presumptively immune from suit in a court where jurisdiction is in doubt.  See Saudi Arabia v. Nelson, 507 U.S. 349, 355 (1993) (“Under the Act, a foreign state is presumptively immune from the jurisdiction of United States courts; unless a specified exception applies, a federal court lacks subject-matter jurisdiction over a claim against a foreign state.”).  Given the contrast between Argentina’s position and the position of foreign sovereigns confronting the possibility of jurisdictional discovery, it would be injudicious to draw conclusions from the NML Capital case with regard to FSIA jurisdictional discovery.  See, e.g., Cohens v. State of Virginia, 19 U.S. 264, 399, 6 Wheat. 264, 399 (1821) (“It is a maxim not to be disregarded, that general expressions, in every opinion, are to be taken in connection with the case in which those expressions are used.” ); see also Armour & Co. v. Wantock, 323 U.S. 126, 132-33 (1944) (“words of . . . opinions are to be read in the light of the facts of the case under discussion . . . . General expressions transposed to other facts are often misleading.”).

Second, while plaintiffs’ counsel are likely to rely upon the Supreme Court’s discussion of Rule 69(a)(2) and its conclusion that the FSIA does not modify the Rule’s authorization of broad post-judgment discovery (cf. NML Capital, 134 S. Ct. at 2254-57), it is unclear whether the same analysis is applicable with respect to FSIA jurisdictional discovery.  To draw a sustainable analogy to NML Capital, a plaintiff’s attorney would need to show that the scope of discovery provided by Rule 26(b) applies where subject matter jurisdiction has not even been established.  This is a complicated issue that merits further examination, but there are reasons to believe that Rule 26(b) discovery is inappropriate if the district court has not yet resolved the issue of subject matter jurisdiction.  See Steven R. Swanson, Jurisdictional Discovery Under the Foreign Sovereign Immunities Act, 13 Emory Int’l L. Rev. 445, 457-58 (1999) (“[I]t has not always been clear whether the FRCP permit jurisdictional discovery.  After all, before jurisdiction has been established a court technically lacks power to order discovery.”); cf. Oppenheimer Fund, Inc. v. Sanders, 437 U.S. 340, 351 n.13 (1978) (indicating that discovery is available with respect to jurisdictional issues, without distinguishing between personal jurisdiction and subject matter jurisdiction); Insurance Corporation of Ireland, Ltd. v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 701-03 (1982) (distinguishing subject matter jurisdiction from personal jurisdiction); see also, e.g., United States v. Sherwood, 312 U.S. 584, 589-90 (1941) (holding that the rules of civil procedure do not “modify, abridge or enlarge the substantive rights of litigants or  . . . enlarge or diminish the jurisdiction of federal courts”); Am. Telecom Co., L.L.C. v. Republic of Lebanon, 501 F.3d 534, 538-39 (6th Cir. 2007) (“Courts are constituted by authority and they cannot [go] beyond the power delegated to them. If they act beyond that authority, and certainly in contravention of it, their judgments and orders are regarded as nullities. They are not voidable, but simply void, and this even prior to reversal.”); Rolls Royce Indus. Power (India) v. M.V. Fratzis M. Stratilatis Navigation Ltd., 905 F. Supp. 106, 107 (S.D.N.Y. 1995) (declining to order discovery in the absence of subject matter jurisdiction).

Third, the “Civil Rule vs. FSIA” conflict advanced by Argentina – which was the “single, narrow question” resolved by the Supreme Court (NML Capital, 134 S. Ct. at 2255) – is a red herring in the context of FSIA jurisdictional discovery.  The issue is not whether the FSIA itself governs jurisdictional discovery; indeed, as the Supreme Court correctly pointed out, the FSIA only expressly addresses discovery in a very limited way.  NML Capital, 134 S. Ct. at 2256; see also 28 U.S.C. § 1605(g).  Instead, the question is whether a district court should exercise its discretion to limit any jurisdictional discovery ordered against a foreign sovereign.  See Crawford-El v. Britton, 523 U.S. 574, 598 (1998).  In this regard, two important observations are in order:

  • District courts limit FSIA jurisdictional discovery in recognition of the fact that (1) a foreign sovereign is presumptively immune from discovery at the beginning of the litigation (cf. NML Article at 12-13) and (2) the court’s subject matter jurisdiction is in doubt. That is true not only with respect to jurisdictional discovery under the FSIA, but also in other circumstances where a defendant is presumptively immune or jurisdiction has not yet been established.   In fact, there are strong similarities between the rules applied in FSIA jurisdictional discovery cases and the rules applied in other situations where a court confronts the propriety of jurisdictional discovery.  See, e.g., Freeman v. United States, 556 F.3d 326, 342 (5th Cir. 2009); St. Clair v. City of Chico, 880 F.2d 199, 202 (9th Cir. 1989); Razore v. Tulalip Tribes of Wash., 66 F.3d 236, 240 (9th Cir. 1995); Encompass Office Solutions, Inc. v. Ingenix, Inc., No. 4:10-CV-96, 2010 WL 2639563, at *2 (E.D. Tex. June 28, 2010); Dichter-Mad Family Partners, LLP v. United States, 707 F. Supp. 2d 1016, 1053-54 (C.D. Cal. 2010).  Because precedent regarding FSIA jurisdictional discovery does not rely on any textual analysis of the FSIA – but instead relies upon well-established precedent regarding the propriety of discovery prior to a resolution of immunity or a determination of subject matter jurisdiction – such precedent remains unaffected by NML Capital.
  • The Supreme Court in NML Capital expressly recognized that comity considerations govern discovery requests targeting foreign sovereigns. See NML Capital, 134 S. Ct. at 2258 n. 6 (“Although this appeal concerns only the meaning of the Act, we have no reason to doubt that . . . other sources of law ordinarily will bear on the propriety of discovery requests of this nature and scope, such as . . . the discretionary determination by the district court whether the discovery is warranted, which may appropriately consider comity interests and the burden that the discovery might cause to the foreign state.”).  In support of this proposition, the Supreme Court cited Société Nationale Industrielle Aérospatiale v. USDC, 482 U.S. 522, 543-44, and n. 28 (1987).  In the portion of Société Nationale relied upon by the NML Capital Court, the Supreme Court stated that factors relevant to “any comity analysis” include “(1) the importance to the . . . litigation of the documents or other information requested; (2) the degree of specificity of the request; (3) whether the information originated in the United States; (4) the availability of alternative means of securing the information; and (5) the extent to which noncompliance with the request would undermine important interests of the United States, or compliance with the request would undermine important interests of the state where the information is located.”  Société Nationale Industrielle Aérospatiale v. USDC, 482 U.S. at 544 n.28.  Because these are similar to factors considered in a traditional FSIA jurisdictional discovery analysis, a plaintiff would at best be jumping from the frying pan (FSIA jurisdictional discovery precedent) into the fire (international comity analysis).  Regardless of which mode of analysis is utilized, it is unlikely to make a material difference in any given case.

In short, a plaintiff seeking to rely upon NML Capital to argue for broader jurisdictional discovery is unlikely to succeed.  Foreign sovereigns – like other similarly situated litigants – should continue to enjoy discovery protections in the context of a challenge to a district court’s jurisdiction under the FSIA.

Republic of Argentina v. NML (No. 12-842) – Why Both Sides Are Wrong

April 11, 2014 By in Discovery Tags: , , , , , , , , , , , , , , , , , , Leave a comment

NML, a Cayman Islands hedge fund, obtained numerous federal judgments against Argentina arising out of Argentina’s default on payment of its public debt. Argentina refuses to satisfy any of the judgments. Because NML has had little success in finding Argentinian assets in the United States subject to execution under the Foreign Sovereign Immunities Act (FSIA), the district court granted NML broad discovery from non-party banks relating to Argentina’s assets overseas. The discovery dispute between NML and Argentina is currently pending in the United States Supreme Court, with oral argument scheduled for April 21, 2014.

The FSIA has been called a “statutory labyrinth” with “many deliberately vague provisions.” While that characterization may hold true regarding certain sections of the FSIA, the statute is a model of clarity and simplicity with respect to the threshold issue in this case: whether foreign assets are accorded a statutory presumption of immunity from execution. Section 1609 provides that only a foreign state’s property “in the United States” is presumptively immune from execution. Nowhere does the FSIA confer presumptive immunity on a foreign state’s assets held outside the United States.

Notwithstanding section 1609’s plain language, the central contention advanced in the Supreme Court by Argentina and the United States (as amicus) is that Argentina’s assets overseas are entitled to presumptive statutory immunity and, as a result, are immune from discovery under the FSIA. Because Argentina and the United States’ argument cannot be squared with section 1609 itself, it is wrong as a matter of law.

Since the FSIA does not accord presumptive sovereign immunity upon a foreign state’s assets overseas, the discovery dispute between Argentina and NML should not be analyzed under the FSIA. Instead, the Supreme Court’s decision in Société Nationale Industrielle Aérospatiale v. USDC, 482 U.S. 522 (1987), controls. The district court and the Second Circuit should have reviewed NML’s discovery requests under the comity analysis set forth in Société Nationale, which is broad enough to accommodate all of the interests and policy considerations raised by the parties and the United States.

With regard to NML’s main argument in the Supreme Court, NML fails to recognize the protections afforded by immunity under United States law. NML contends that because the text of the FSIA does not mention “discovery,” the FSIA does not limit the discovery available to plaintiffs in post-judgment proceedings. With respect to domestic assets, NML’s contention is contrary to settled law. Under Supreme Court and circuit precedent, protection from discovery inheres in the very concept of immunity itself. Moreover, with regard to foreign assets, NML does not undertake the comity analysis required under the Supreme Court’s decision in Société Nationale.

In the end, while the discovery dispute between NML and Argentina may be of critical importance to the parties, this case does not belong in the Supreme Court. There is no circuit split with regard to the threshold issue, namely whether foreign assets are protected from execution under the FSIA. Instead, the NML case simply involves the lower courts’ erroneous failure to apply the Société Nationale comity analysis to NML’s discovery requests targeting Argentina’s assets overseas. To avoid issuing an unnecessary decision in the sensitive area of foreign sovereign immunity law, the Supreme Court should consider remanding the matter with instructions to analyze the requested discovery under Société Nationale.

Read the full article via the PDF version below:

Monetary Contempt Sanctions in FSIA Litigation

February 10, 2014 By in Discovery Tags: , , , , , , , , , , Leave a comment

On January 24, 2014, United States District Judge Richard M. Berman found the Republic of Iraq, the Ministry of Industry of the Republic of Iraq, and the attorneys for the Republic and the Ministry in contempt of court for failure to comply with a discovery order dated August 29, 2012.  Servaas v. Republic of Iraq, Case No. 09 Civ. 1862(RMB), 2014 WL 279507 (S.D.N.Y. Jan. 24, 2014).  The court held that the “sanction imposed upon Iraq is $2,000 per day effective Friday, January 24, 2014, and continuing for each day that Iraq continues to fail to comply with the Discovery Order.”  Id. at *5.  The sanction imposed upon the sovereign defendants’ attorneys requires the payment of all reasonable attorneys’ fees and costs associated with the plaintiff’s pursuit of post-judgment discovery.  Id.  In an order dated February 7, 2014, the court found that the attorneys’ fees/cost amount was $70,422.13.  Docket No. 146.

Servaas is not the first case in which substantial sanctions have been imposed for discovery violations in FSIA cases.  For example, in FG Hemisphere Associates, LLC v. Democratic Republic of Congo, 637 F.3d 373 (D.C. Cir. 2011), the D.C. Circuit affirmed a finding of contempt of court against a foreign sovereign that failed to comply with a discovery order.  The court upheld monetary sanctions of up to $80,000 per week until the foreign sovereign complied with outstanding discovery requests.  Id. at 376.

I do not intend to examine here whether or not monetary contempt sanctions are permissible under the FSIA.  While the FSIA itself is silent on the issue, the FSIA’s legislative history states that “appropriate remedies would be available under Rule 37, F.R. Civ. P., for an unjustifiable failure to make discovery.”  H.R. Rep. 94-1487, at 23 (1976).  The D.C. Circuit strongly rejected the argument that monetary contempt sanctions could not be imposed under the FSIA.  See FG Hemisphere Assoc., 637 F.3d at 376-80.  However, the court’s conclusion is inconsistent with Fifth Circuit law (cf. Af-Cap, Inc. v. Republic of Congo, 462 F.3d 417, 428-29 (5th Cir. 2006)), and the United States Executive Branch has persuasively argued that any monetary contempt sanction would be unenforceable against a foreign sovereign.  See Brief of the United States as Amicus Curiae, filed on October 7, 2010, in FG Hemisphere Assoc. (“U.S. Amicus Brief”), at 7-14. 

Assuming arguendo that monetary contempt sanctions are permissible under the FSIA, the question remains whether such a step is an advisable exercise of a federal court’s power.  In the underlying discovery order, the Servaas court characterized the discovery dispute between the parties as a “routine matter[].” Docket No. 86, at 1 n.2.  However, there is nothing “routine” about ordering wide-ranging discovery against a foreign sovereign.  The language of the earlier order, and the lack of detailed analysis in the recent contempt order, suggest that the district court in Servaas did not appreciate the significance of imposing monetary contempt sanctions upon a foreign sovereign for failure to comply with a discovery order. 

At the very least, a court contemplating the imposition of monetary contempt sanctions against a foreign state for discovery violations should consider a range of issues, including:

1.  Is the contempt order enforceable against the foreign sovereign and, if not, does it constitute a proper exercise of the district court’s power?  Just as with any other form of equitable relief, enforceability should be a prime consideration for the court.  See In re Estate of Ferdinand Marcos Human Rights Litig., 94 F.3d 539, 548 (9th Cir. 1996) (holding that where a court was without power to enforce an injunction against a foreign sovereign, the court “abused its discretion by issuing a futile injunction”); see also Virginian Ry. Co. v. Sys. Fed’n No. 40, 300 U.S. 515, 550 (1937) (“a court of equity may refuse to give any relief when it is apparent that that which it can give will not be effective or of benefit to the plaintiff”).  If the district court cannot enforce a monetary contempt sanction against a foreign sovereign, it generally should not impose such a sanction.

2.  Is the contempt order imposed in the context of post-judgment proceedings or jurisdictional discovery?  Given that a foreign sovereign’s presumptive immunity from suit includes immunity from all of the burdens of litigation (Kelly v. Syria Shell Petroleum Dev., 213 F.3d 841, 849 (5th Cir. 2000)), it would appear that a district court’s discretion to impose monetary contempt sanctions should be limited to the post-judgment context – where the sovereign has already been held not to be immune.  Absent extraordinary circumstances, such sanctions should not be imposed in the context of FSIA jurisdictional discovery.

3.  Is the contempt order the sole remaining option, or are there other possible means to encourage compliance with the discovery order?  Since this is an important issue even outside of the FSIA context, it would appear particularly relevant in cases involving a foreign sovereign.  Cf. Hicks on Behalf of Feiock v. Feiock, 485 U.S. 624, 637 n.8 (1988) (stating that “in wielding its contempt powers, a court must exercise the least possible power adequate to the end proposed”) (citations and quotations omitted).

4.  Does the case involve a foreign sovereign or an agency/instrumentality of a foreign sovereign?  Given the policies underlying the FSIA, courts should be much more wary about imposing monetary contempt sanctions upon a foreign sovereign itself (as opposed to an agency or instrumentality).  Cf. H.R. Rep. No. 94-1487, at 11 (stating that the service provisions applying to foreign sovereigns were intended “to minimize potential irritants to relations with foreign states”).  Moreover, FSIA practitioners should be aware that “a court may not sanction a foreign instrumentality for discovery violations committed by its sovereign.”  Thai Lao Lignite (Thailand) Co., Ltd. v. Gov’t of Lao People’s Democratic Republic, 10 CIV. 5256 KMW DCF, 2013 WL 3970823, at *6 (S.D.N.Y. Aug. 2, 2013).

5.  Is the contempt order consistent with international law and international practice?  Given the prevailing rules in the international realm, and the fact that the FSIA was intended to be consistent with international law (cf. H.R. Rep. No. 94-1487, at 7), this factor would generally counsel against the imposition of monetary contempt sanctions against a foreign sovereign.  See, e.g., European Convention on State Immunity, Article 18 (E.T.S. No. 074); United Nations Convention on Jurisdictional Immunities of States and Their Properties, Article 24(1); UK State Immunity Act, § 13; Canadian State Immunity Act, §§ 12(1), 10(1); Singapore State Immunity Act, § 15; Pakistan State Immunity Ordinance, § 14; Australian Foreign States Immunities Act of 1985, § 34; see also U.S. Amicus Brief at 21-24.

6.  Is the contempt order consistent with the United States’ policy to encourage foreign states to appear in court?  It is well-established that it is in “the interest of United States’ foreign policy to encourage foreign states to appear before our courts in cases brought under the FSIA.”  Hester Int’l Corp. v. Fed. Republic of Nigeria, 879 F.2d 170, 175 (5th Cir. 1989).  The United States government itself is not subject to monetary contempt sanctions in domestic courts.  U.S. Amicus Brief at 25-26.  Because the unequal treatment of foreign sovereigns in this regard is likely to be a significant foreign relations irritant, the policy of encouraging sovereigns to appear in United States courts generally does not appear well-served by the imposition of monetary contempt sanctions.

7.  What was the nature of the underlying discovery order?  If the underlying discovery order permitted wide-ranging and intrusive discovery against the sovereign, non-compliance with that order should rarely give rise to monetary contempt sanctions.  In this respect, the Servaas case is particularly troubling.  The underlying discovery order had granted the plaintiff’s motion to compel a wide range of discovery, including discovery relating to the sovereign defendants’ “‘assets and commercial activities with ties to the United States,'” requests “relating to the ‘formation of the [Ministry and Iraq’s Ministry of Trade and their] State Owned Enterprises and other agencies and/or instrumentalities,’ the ‘financial activity of the Ministry, including but not limited to all budget documents, balance sheets, income statements, and asset listings,’ and the ‘source of operating funds’ of the Ministry and Iraq’s Ministry of Trade.”  Docket No. 86, at 5 (brackets in original).  On its face, the scope of the discovery order is much too broad – both because it does not appear tailored to discover evidence relevant to the post-judgment proceedings and because it seeks sensitive (and presumably confidential) documents from Iraq’s Ministry of Trade.  Those factors alone should strongly counsel against the imposition of monetary contempt sanctions against the sovereign for failure to comply with the discovery order.

8.  Is the contempt order consistent with the doctrine of reciprocity?  Foreign sovereign immunity derives in part from “fair dealing” and “reciprocal self-interest.”   Republic of Philippines v. Pimentel, 553 U.S. 851, 866 (2008) (quotations and citations omitted).  That doctrine appears especially applicable in this context.  To provide a hypothetical, suppose that the United States is sued in foreign courts for the eavesdropping activities of the National Security Agency (“NSA”).  If the foreign court orders the United States to provide all NSA documents relevant to the particular lawsuit, the United States would almost certainly object and refuse to turn the documents over.  Under Servaas and other similar cases, the foreign court could then impose a major monetary sanction against the United States for the lack of compliance.  “In the field of international law, where no single sovereign reigns supreme, the Golden Rule takes on added poignancy.”  De Sanchez v. Banco Cent. De Nicaragua, 770 F.2d 1385, 1398 (5th Cir. 1985).  Before courts in the United States impose monetary contempt sanctions on foreign sovereigns, they should consider whether it is in the United States’ interest to face similar treatment overseas.

All of the foregoing issues should be properly taken into consideration by a court imposing monetary contempt sanctions upon a foreign sovereign; unfortunately, it does not appear that the Servaas court undertook such an analysis, and for that reason its opinion is disturbing.

Finally, as noted above, the Servaas court imposed sanctions exceeding $70,000 upon the attorneys defending Iraq and the Ministry.  Courts that contemplate imposing sanctions against FSIA defense counsel should consider that a foreign sovereign is not a typical client.  For example, with respect to discovery, a sovereign may take a principled stance that certain documents should not be turned over: “it is important to recognize the strongly held view of many foreign states that they are not subject to coercive orders by a U.S. court. Absent specific evidence to the contrary, the refusal of a sovereign state to conform to a judicial directive should not be considered as an expression of scorn or contempt for which such sanctions are normally imposed. Rather, such a refusal may reflect a determination by that foreign state that a U.S. court lacks power to control its conduct.”  U.S. Amicus Brief at 17.  It would be unfortunate if private attorneys are punished for such decisions made by foreign sovereigns, particularly since the sovereign is equal to the United States as a matter of international law – and is, unlike typical private parties in litigation, entitled to decide that it will not follow the directive of a United States court.  The sovereign itself may have to face the consequences of that decision, but the sovereign’s attorneys should not.

The Supreme Court’s Grant of Certiorari in Republic of Argentina v. NML Capital, Ltd.

January 10, 2014 By in Discovery Tags: , , , , , , , Leave a comment

The United States Supreme Court granted certiorari today in Republic of Argentina v. NML Capital, Ltd., Case No. 12-842.  For all of the reasons I discussed in a previous post, the NML Capital case has the potential of becoming a major development in FSIA jurisprudence, particularly with respect to the “nuts and bolts” of federal litigation involving foreign sovereigns.

Discovery under the FSIA: An Examination of the Solicitor General’s Brief in NML Capital

December 15, 2013 By in Discovery Tags: , , , , , , , , Leave a comment

On December 4, 2013, the United States Solicitor General filed an amicus curiae brief in the Supreme Court in Republic of Argentina v. NML Capital, Ltd., No. 12-842.  I have several observations regarding the Solicitor General’s submission and related issues:

•       On balance, the Solicitor General makes a persuasive case that the Court should grant certiorari.  The Second Circuit’s decision in EM Ltd. v. Republic of Argentina, 695 F.3d 201 (2d Cir. 2012), is in conflict with Rubin v. Islamic Republic of Iran, 637 F.3d 783 (7th Cir. 2011), on an issue of considerable importance – namely the scope of discovery permissible in post-judgment proceedings under the FSIA.  Moreover, for reasons cogently set forth by the Seventh Circuit in Rubin, there is no doubt that – contrary to the Second Circuit’s view – a general asset discovery order violates the FSIA.  See Rubin, 637 F.3d at 794-99.

•       The Solicitor General’s brief recognizes several important principles implicated by discovery against foreign sovereigns, including:

•           “The presumptive immunity in the FSIA protects foreign sovereigns not only from liability or seizure of their property, but also from the costs, in time and expense, and other disruptions attendant to litigation.”  Brief for the United States as Amicus Curiae (“Amicus Brf.”) at 10.

•           “To permit burdensome and intrusive discovery . . . would be inconsistent with both the FSIA’s protections and the comity principles the statute implements.”  Id.

•           Discovery “should be conducted in a manner that respects the comity and reciprocity principles that the FSIA was enacted to implement and safeguard.”  Id. at 11.

•           If allowed, discovery should only “be ordered circumspectly and only to verify allegations of specific facts crucial to an immunity determination.”  Id. at 12.

•       The Solicitor General’s brief cites the Supreme Court’s decision in Société Nationale Industrielle Aérospatiale v. United States Dist. Ct. for the S.D. of Iowa, 482 U.S. 522 (1987).  The principles relating to foreign discovery enunciated in Société Nationale are generally not, in my view, sufficiently relied upon by attorneys defending foreign sovereigns in U.S. litigation.  In Société Nationale, the Supreme Court stated:

American courts, in supervising pretrial proceedings, should exercise special vigilance to protect foreign litigants from the danger that unnecessary, or unduly burdensome, discovery may place them in a disadvantageous position. Judicial supervision of discovery should always seek to minimize its costs and inconvenience and to prevent improper uses of discovery requests.  When it is necessary to seek evidence abroad, . . . the district court must supervise pretrial proceedings particularly closely to prevent discovery abuses. . . . Objections to “abusive” discovery that foreign litigants advance should therefore receive the most careful consideration.  In addition, we have long recognized the demands of comity in suits involving foreign states, either as parties or as sovereigns with a coordinate interest in the litigation.  American courts should therefore take care to demonstrate due respect for any special problem confronted by the foreign litigant on account of its nationality or the location of its operations, and for any sovereign interest expressed by a foreign state.

Société Nationale, 482 U.S. at 546.  Since Société Nationale addressed any case involving “foreign litigants,” its cautionary language should apply with particular force with respect to foreign sovereigns.  In other words, Société Nationale should be considered the floor, and not the ceiling, of discovery protections afforded foreign states under the FSIA – and it is therefore a powerful tool to use on behalf of foreign sovereigns in discovery proceedings.

•       The Solicitor General recognizes that “discovery requests directed at third parties may burden the foreign state itself, as it may have to participate in litigation over the scope and manner of discovery.”  Amicus Brf. at 17.  If accepted by the Supreme Court, this view could have a significant practical impact in FSIA cases involving attempts at discovery against third parties to obtain jurisdiction against foreign states.

•       Although not mentioned in the Solicitor General’s brief, the circuit split created by EM Ltd. was long in the making.  The Second Circuit has always been the circuit that is the least sensitive to the concerns of foreign sovereigns relating to discovery under the FSIA.  See, e.g., Reiss v. Société Centrale Du Groupe Des Assurances Nationales, 235 F.3d 738, 748 (2d Cir. 2000).  Given the importance of uniformity under the FSIA, NML Capital provides the opportunity to resolve significant differences in circuit law with respect to discovery involving foreign states.

•       The Supreme Court has never before spoken to the issue of discovery under the FSIA.  If certiorari is granted in NML Capital, the resulting decision could be the most important Supreme Court FSIA precedent since Nelson – particularly with respect to the practical aspects of litigation against foreign states in federal court.