Hefler: What is the problem as between U.S. and EU jurisdictions (and other global jurisdictions) when cross-border discovery is required?
Dale: Put as briefly as possible, U.S. discovery is extremely broad compared with that of any other jurisdiction. Other common law countries which require discovery place limits around what must be produced, firstly as to scope – it must be proportionate – and secondly by imposing restrictions on the use of personally identifiable information and other private data. These differences inevitably cause collisions when U.S. courts require discovery from EU (and other) jurisdictions. Those collisions translate into additional time, cost and risk, which must be factored into any discovery exercise that is likely to involve collections abroad.
Hefler: Could you explain the uniqueness of U.S. discovery obligations and how they compare to the UK and the EU judicial systems?
Dale: The Federal Rules of Civil Procedure impose a test of relevance; further, they require what we in the UK used to call “train of inquiry discovery,” that is, documents which may not themselves be admissible but that may lead to other evidence. The UK narrowed that scope in 1999, with a much more restricted definition. On top of that, the UK Civil Procedure Rules require that discovery be proportionate and require judges to manage cases actively. In theory, the FRCP require the same in principle, but very few parties or judges (there are exceptions) take any notice of these restrictions.
There is no such thing as “the EU judicial system.” Each country is a separate jurisdiction with its own laws and court rules. Most mainland EU countries are civil code jurisdictions as opposed to common law ones and are strangers to the concepts of discovery. They are coming across these concepts increasingly as international trade develops and as U.S. regulators purport to impose discovery-related demands on foreign parties.
Hefler: How do the EU laws compare to laws in Asia?
Dale: Asia is a vast region made up of some very different jurisdictions. Hong Kong and Singapore base their procedure rules on those of the UK; others are civil law jurisdictions with both differences and similarities between them.
Most jurisdictions across the region have enacted laws which impose restraints on the use and export of data. In addition to data protection principles similar in concept to those of the EU, there are other restrictions. Banking secrecy laws, healthcare data protection and protected information about defense matters pose increasing difficulties both for those who need the information for U.S. litigation or regulatory purposes and for those who are expected to comply with these demands.
Hefler: What were the practical approaches discussed at Sedona’s Working Group 6 meeting in London this past summer, 2014?
Dale: What is discussed at Sedona stays at Sedona, but I give little away by suggesting that there is an inevitable focus on AsiaPac, driven partly by the increase in trade between the U.S. and the various Asian countries and partly by the need to manage increasingly strict data protection and privacy laws. The main practical point is really an extension of what should apply in any discovery exercise – asking what laws apply, where is the data, what particular problems may arise, what is the best way of dealing with them and what are the timescales and costs likely to be.
Hefler: What are the legal IT and practical problems when it comes to cross-border e-discovery?
Dale: Managing discovery across borders inevitably adds to the time, complexity and expense of electronic discovery.
Variety of languages causes issues, both when it comes to taking and giving instructions and in the identification and search for documents; this is particularly true in Asian countries, where the complexities of Chinese, Japanese and Korean (“CJK”) languages gave UBIC’s software its original niche purpose. Other practical things to consider include customs restrictions, the possible need for visas, the availability of appropriate hosting and processing services and the presence of suitably skilled staff. On top of that is a layer of cultural differences; some of these are inevitable in countries which do not subscribe to the U.S. custom of litigation; others are more nuanced: for instance, an employee who provides discovery may be seen as disloyal to a company or its managers; information or activities that Americans are open to discussing may be considered private in other countries; in some places, the words "yes" or “OK” may not in fact signify real agreement.
Hefler: As discovery becomes increasingly global, is it fair to say that jurisdictional and cultural issues become more significant than technical ones?
Dale: Big Data, social media, BYOD and all those other issues which are becoming significant in the U.S. are no less so in other jurisdictions. Assuming that your search software is capable of dealing with the languages (not something to be taken for granted), then the technology and the principles are little different from country to country. The jurisdictional differences, whether they lie in laws or in culture, are very much harder to manage. A skilled technician armed with appropriate equipment may be as good at his job in one country as in another, but it takes local connections, local advice, and local experience to be able to navigate the non-technical aspects of cross-border discovery.
Hefler: Why does China pose unique challenges?
Dale: China has a concept of state secrecy – all countries do to some extent, but the particular problem in China is that it is not always easy to identify what a state secret is. Much industrial and commercial information, often the very things that are likely to be relevant to litigation or an investigation, is classified as a state secret, making it even harder for legal counsel or government investigators to do their jobs in the way expected by U.S. courts and regulators. In China more than anywhere, investigators need a combination of local knowledge and the right technology to identify quickly the data that may cause difficulty; decisions can be made about factors that affect timelines and cost, including the question of whether official clearance is required.
Hefler: Why are we seeing such a high rate of regulatory activity?
Dale: Regulatory investigations are the biggest driver of eDiscovery in Asia, and that influence is expanding. Increasingly the U.S. Foreign Corrupt Practices Act is a major factor, reflecting both international attention to business practices and an increase in staff and resources applied to enforcement. The UK Bribery Act is less pervasive so far, but it is nevertheless seen as a source of regulatory risk. Asian regulators are increasingly active, particularly in the financial world. Companies are increasingly implementing internal compliance reviews.
Increasing cooperation among regulators from different countries is expected to cause a greater number of investigations and eDiscovery in more countries. This has various implications beyond mere volume: it means that no one request can be dealt with without regard to potential future investigations from elsewhere; regulatory investigations are often followed by litigation as shareholders, employees or customers bring claims; and the pressure to conduct internal investigations increases.
Hefler: Do these problems have potential solutions?
Dale: In many cases, the issues can be resolved. Offering a candid and informed approach to opponents, courts or regulators may help, provided that it is made early enough, backed by appropriate local legal advice, and includes an alternative proposal that amounts to an acceptable compromise between the original demand and the reality on the ground. It has to be said, however, that courts and regulators are often unsympathetic to such approaches.
The Sedona Conference published in 2011 its International Principles on Discovery, Disclosure, and Data Protection, which makes various suggestions for reconciling the conflicts posed by cross-border discovery demands. It is a good idea to make sure that the court or regulator is aware of them.
I have already mentioned various essential steps, and will re-emphasize the importance of seeking and taking truly local advice. Also vital is the need to employ appropriate technology to undertake the searches, thereby giving the best chance of identifying documents that contain material likely simultaneously to be considered relevant and to be protected by local laws. Without that help, it will be impossible either to negotiate with local custodians and authorities or to make a case to the U.S. court or regulator.
The technology alone is not enough, of course – its users must understand the context, the language and the objectives as well as the bare operation of the tools. Very few providers have the required combination of skills, tools, languages and hosting facilities, and the choice of eDiscovery provider is one of the most critical elements in a successful cross-border exercise.
Hefler: What are your closing thoughts?
Dale: They come down to two really – read the Sedona International Principles and choose the right lawyers and eDiscovery providers. You will not necessarily succeed with them; you will almost certainly fail without them.
Published September 25, 2014.
