I. Introduction

One of the earliest discovery disputes between Germany and the U.S. occurred in 1874, when U.S. lawyers attempted to take sworn testimony from German citizens in Germany for the use in a U.S. trial.[1]  The U.S. argued that the evidence was properly taken by a U.S. court-appointed commissioner and therefore all nations should support such an undertaking.[2]  Germany countered by offering the assistance of its courts if the U.S. would recognize that the proper procedures in gathering evidence across borders are letters rogatory.[3]  There is no evidence of any further conflict between the two nations arising around this issue.[4]   This is because in the aftermath of WWII until around 1970 only very few U.S. cases required the gathering of evidence on German soil.[5]  It was however the first sign of what would later become known as the Justizkonflikt (judicial conflict) between Germany and the U.S.

With an increase in transnational commerce came increased transnational litigation.  This was true especially in the areas of products liability, anti trust, and securities litigation.[6]  Whenever a party or piece of evidence is located in a foreign country procedural matters become more complex.  This is especially true when the parties hail from different legal traditions.  In this paper I will analyze the different challenges that arise when the U.S. common law meets the civil law tradition from Germany in transnational lawsuits.  Specifically, I will focus on the challenges of obtaining documentary evidence in an equitable manner for both parties.  Because the two legal systems involved have very different approaches to the discovery of evidence, there often is potential for conflict.  However, this article will not pass judgment on which system reigns supreme. 

Instead I will analyze the current framework for judicial cooperation between the two countries in Section 2 based on their respective domestic legal systems and then illustrate the reasons for the continued conflicts in Section 3.  Drawing from lessons developed in international commercial arbitration in Section 4, I will suggest changes to U.S. law in order to improve the fairness and equity of transnational litigation between parties from Germany and the U.S.  Specifically, I suggest an amendment to the federal statute that grants U.S. style discovery to foreign litigants.  The amendment would require a guarantee of reciprocity to U.S. litigants in obtaining similar discovery abroad.  While such an action would certainly not solve all challenges in transnational litigation, it could limit the inequities that can occur under the current law.  Additionally I support the implementation of the American Law Institute (ALI) / International Institute for the Unification of Private Law (UNIDROIT) Proposed Rules of Transnational Civil Procedure.[7]  They represent a workable compromise of the procedural rules regarding the discovery of evidence between civil law and common law systems.

II. Current framework for judicial cooperation in transnational litigation    

At the outset it is helpful to consider the different characteristics of the procedural systems in the two countries and highlight their differences.  Both systems are dedicated to a just, speedy, and inexpensive resolution of civil disputes.[8]  However, the means to achieve these common ends differ greatly.  I will describe the domestic procedural mechanisms for the discovery of evidence, followed by those that address litigation transcending national borders.  The domestic mechanisms are important, because they naturally have a strong influence over the transnational stance taken by the individual countries.

A. Germany’s domestic “discovery” procedures

            As a civil law country, Germany has a very different approach to the discovery of evidence than the common law. This is true especially in comparison with the U.S.  As a matter of fact under German law the term ‘discovery’ has no recognized legal significance. That is because a party is under no general obligation to provide the opposing party with documents.[9]  This means that a party must generally produce its own documents to support its claim or defense.  One cannot rely on the opposing party the come forward with documents that are not helpful to their own case, even if those documents are in their possession.[10]  This is known as the Ausforschungsverbot, which constitutes the counterpart to the common law’s prohibition of so-called “fishing expeditions.”[11]  Although it takes a much stricter form, there are a few narrow exceptions to this general rule.  A court may, for example, require the production of a document if it deems that document to be material to the case and finds the request is justified.[12] 

Another drastic distinction from the common law approach is that documents sought in this way must be described with specificity.  It does not suffice to mere request any and all documents relating to a certain subject.[13] 

In German civil procedure it is the trial judge rather than the attorneys who controls the entire discovery process.  Professor Langbein describes the process by stating that: “the court rather than the parties’ lawyers take the main responsibility for gathering and sifting evidence, although the lawyers exercise a watchful eye over the court’s work. [N]either the plaintiff’s nor defendant’s lawyer will have conducted any significant search for witnesses or for other evidence unknown to his client. Digging for facts is primarily the work of the judge.”[14]

            Unlike the U.S. developments described below that have lead to a sharp decline in jury trials, German cases are mostly concluded through the standard judicial process.  For example, in the Bavarian Landgericht (trial court) 59,192 civil cases were filed in 2008.[15] [16]  Of those 53,231 cases were concluded by the standard judicial process.[17]

            However, from a U.S. point of view the German civil procedures contain several shortcomings when it comes to uncovering essential facts.[18]  The common critique is that the German procedures are far too favorable for defendants.[19] 

            B. Germany’s assistance to foreign courts

In response to the increase of transnational litigation in the 1970’s and 1980’s Germany became a member of the Hague Convention on the Taking of Evidence Abroad in Civil and Commercial Matters (hereinafter Hague Evidence Convention).[20]  The Hague Evidence Convention was ratified by seventy-three states.[21] The Convention’s purpose is to provide effective means to bridge the gap between common law and civil law systems.[22]  A letter of request can be sent through the Central Authority of the requesting State to the Central authority of another Contracting State.[23]  There is a longstanding tradition of courts using such letters to obtain international judicial assistance even in the absence of international treaties.[24]  Although the Convention generally allows letters of request to be in the English or French language, Germany has made a reservation under Article 33, requiring all Letters to be translated into German.  Article 3 requires the Letter of Request to contain:

“(a) the authority requesting its execution and the authority requested to execute it, if known to the requesting authority; (b) the names and addresses of the parties to the proceedings and their representatives, if any; (c) the nature of the proceedings for which the evidence is required, giving all necessary information in regard thereto; (d) the evidence to be obtained or other judicial act to be performed.”[25]

If granted, this request is then forwarded to the local courts in order to take evidence or perform some other judicial act for judicial proceedings in the requesting State.[26]

However, the Hague Evidence Convention has been interpreted very differently in Germany than it has in the U.S.  The Convention states that proceedings may be commenced or merely in contemplation. [27]  Nonetheless, many contracting states, through the use of optional reservations to the Convention, require the proceeding to be at an advanced stage.  Additionally, evidence should be identified with as much detail as possible, instead of making an open-ended inquiry.[28]

Germany is among those countries that have enacted a law under Article 23 of the Hague Convention that specifically prohibits German courts from granting pre-trial discovery requests originating in foreign courts.[29]  If the request for discovery is coming from a U.S. court it is seen as a per se request for pre-trial discovery and will therefore likely not be granted.[30]

Through Germany’s reservation under Article 23, letters of request for the purpose of pre-trial discovery have been all but nullified, which further reduces the usefulness of the Hague Evidence Convention.[31]  Among other reasons, Germany has voiced strong concerns that U.S. style discovery would not adequately provide protection of trade secrets through the visitations of factories.[32]  Most contracting parties agreed with Germany and found that the Hague Evidence Convention, with the possibility of pre-trial discovery practices, presented a possible threat to state sovereignty over economic regulation.[33]  Thus many states viewed this portion as a violation of international law and made Article 23 reservations.[34]

Finally there are significant delays that can present another difficulty parties encounter when making requests via the Hague Convention’s letters of request.[35]  Several months can pass between the transmission of the letter of request and the execution of the request by a foreign court.[36] 

C. Domestic U.S. discovery practices

In the U.S. the implementation of the Federal Rules of Civil Procedure (hereinafter Federal Rules) in 1938, has lead to a continuous growth in emphasis on the discovery process.[37]  Some have even gone so far as to describe the traditional trial by jury, the hallmark of the common law, as a vestige of the past.[38]  For example, of the 276,397 cases filed in 2009, only 2,138 actually made it to the jury trial stage.[39]  The term U.S.-style discovery refers to the broad pre-trial discovery practices that have taken center stage in U.S. civil procedure.[40]  The discovery proceedings are often time consuming and expensive.  They consist of oral testimony, viewing, written responses, and physical examination of persons who are parties.[41]  Parties can be allowed to ‘fish’ for new grounds to hold the defendant liable or help the attorney develop legal theories.[42]  The Federal Rules have given American attorneys tools that empowered them in areas that used to be under the control of trial courts.[43]

U.S. litigants can request discovery regarding “any nonprivileged matter that is relevant to any party’s claim or defense.”[44] Under the Federal Rules of Evidence what is and is not relevant to a case is also interpreted fairly broadly.  All that is required is “any tendency to make a fact [of consequence] more or less probable than it would be without the evidence.”[45]  In addition to broad discovery rules the FRCP require parties to make certain disclosures without any discovery requests at all.[46]

In practice the amount of discovery requested varies greatly depending on the type of legal claims the parties make.[47]  Cases that involve trade regulations, patents, securities fraud, or products liability can create millions of documents.[48]  These documents often shed light on a companies’ internal operations over a certain period of time.[49]  Other cases that involve, for example, tort or contract claims can produce only very few discovery requests.[50]

Both within the U.S. and abroad this system of broad pre-trial discovery has received much criticism.[51]  It is seen as too expensive, time consuming, and burdensome for the party expected to comply with the requests.[52]  As it will be shown this is especially true from a German perspective that is characterized by a strong interest in protecting trade secrets of its businesses. 

On the other hand allowing parties to request a broad range of evidence from each other has the effect of reducing the possibility of surprise at trial.  U.S. civil procedure “place[s] a great emphasis on the need for complete knowledge of the underlying facts of a civil action.”[53]  More information is available which generally can be seen as increasing the likelihood for the discovery of the truth.  This practice has also encouraged settlements of disputes.  Another aspect of the FRCP encouraging settlements is Rule 68, the offer of judgment.  It imposes a cost shift on the party who rejected the offer for a settlement if it does not receive a favorable final judgment.[54]

D. U.S. discovery assistance to foreign courts

Such broad discovery is also available to foreign litigants through a U.S. federal statute that provides the district courts with the authority to grant discovery requests for the use in foreign or international tribunals.[55]  This is accomplished due to regard for judicial comity, which has been called the golden rule of international relations.[56]  The United States Supreme Court has defined comity as neither an absolute obligation nor a mere courtesy. Instead “it is the recognition which one nation allows within its territory to the legislative, executive or judicial acts of another nation, having due regard both to international duty and convenience, and to the rights of its own citizens or of other persons who are under the protection of its laws.”[57]  For those reasons U.S. courts are required to cooperate with foreign courts and also to expect a degree of reciprocity when assistance is required abroad.

In order to further comity considerations the U.S. adopted 28 U.S.C. 1782.  Through its various amendments it has become a popular tool for foreign parties to obtain documents located within the U.S.[58]  The statute has two purposes.  First, Congress wanted to provide efficient ways for foreign litigants to obtain assistance with their discovery requests.  Second, Congress felt that through leading by example other countries would be encouraged to grant the same type of assistance to U.S. litigants.[59]  As it will be shown this second purpose has not been realized as Congress failed to consider the opposition to U.S. style discovery.

Under § 1782 the only requirements are that (1) the person from whom the discovery is requested resides within the district or can be found there, and (2) that the request is made either via letters rogatory by the foreign tribunal or by an interested party.[60]  Letters rogatory, also known as letters of request, are sent from one court directly to another to obtain assistance for the discovery of evidence.[61]  More common is a request by an interested party directly to the court. This aspect of § 1782 makes it much more effective for foreign litigants since time delays associated with letters rogatory can be avoided.  The term “interested parties” no longer reserves discovery requests only for parties, instead anyone possessing “a reasonable interest in obtaining judicial assistance” can now make a request under § 1782.[62]

The U.S. Supreme Court interpreted § 1782 in the landmark case of Intel Corp. v. Advanced Micro Devices, Inc.[63]  In that case Advanced Micro Devices (AMD) filed an antitrust complaint against the Intel Corporation (Intel).  The main question for the purposes of this paper was whether or not the evidence needed to be discoverable in the foreign proceeding before a U.S. district court would be able to grant the discovery request.[64]  In Intel the Court found no foreign discoverability requirement implied in § 1782, but rather granted discretion to the district courts whether or not to grant a § 1782 request.[65]  However the Intel decision did not result in the creation of specific factors that would aid a district court judge in determining the influence of a foreign courts opposition to the discovery request.[66]  A main consideration for the Court was the danger of misinterpretation of foreign law by the district court judges.[67]  The Court reasoned further that a foreign country would not necessarily take offense to evidence obtained through § 1782 even if it would not be discoverable in that foreign country under its own rules of civil procedures.[68] 

To decide whether or not to grant the request, the district court may look to the Federal Rules of Civil Procedure (hereinafter FRCP).  Nonetheless, consideration is given to the foreign tribunal and in the event that it opposed the discovery, the request might not be granted.  Such considerations by the district courts reflect notions of comity and international judicial cooperation rather than a textual requirement of § 1782.[69]  

The Intel decision has been criticized as having interpreted § 1782 too liberally and thereby unnecessarily expanding the availability of judicial assistance abroad.[70]

The U.S. has taken a very different stance than Germany towards the Hague Evidence Convention through its holding in Aéreospatiale.[71] Aéreospatiale is a French manufacturer of airplanes.  One of its airplanes crashed in Iowa and injured three U.S. citizens.[72]  The U.S. citizens filed suit against Aerospatiale in the U.S. District Court for the Southern District of Iowa for negligence in manufacturing and design.[73]  The plaintiffs attempted to obtain evidence located in France and Aérospatiale moved for a protective order claiming that the Hague Evidence Convention applies to the discovery request, and not the FRCP.[74]  Both the trial court and the Court of Appeals rejected Aérospatiale’s argument and applied the FRCP.[75]  The Supreme Court agreed by holding that the Hague Evidence Convention is not the exclusive and mandatory way of obtaining evidence abroad.[76]  Instead, the Court found the FRCP to be the primary procedural mechanism for discovery unless the Hague Evidence Convention was found to be conducive to discovery.[77]

Some commentators criticized the way in which the Court interpreted the Hague Evidence Convention in Aérospatiale.[78]  The Court viewed the multilateral treaty as if it were a domestic law by looking only at the U.S. actors when attempting to discern the intent of the drafters.  Specifically, a reference was made to the U.S. delegation regarding the treaty as merely supplemental to national discovery procedures.[79]  Critics say that as a multilateral treaty the Court should have focused on the “overall object and purpose of the treaty as seen from the differing perspectives of the many countries that took part in negotiations.”[80] 

With regard to a unified system of transnational litigation procedures the Aérospatiale decision was a setback.  By circumventing the Hague Evidence Convention as the standard way of obtaining evidence abroad, FRCP could still be applied by U.S. courts.  The Convention is therefore relegated to a mere alternative with very little practical application between Germany and the U.S.

This description has by no means been an exhaustive enumeration of all differences between German and U.S. domestic discovery rules.  However, this brief overview already makes it clear that significant differences exist that have the potential for serious conflict in transnational litigation.

III. Reasons for Germany’s reluctance to accept U.S. style discovery

Extensive pre-trial discovery procedures are uniquely American and appear foreign to the rest of the world.[81]  Most civil law jurists regard U.S.-style discovery as detrimental to the fair and speedy resolution of a dispute.  It is seen as much too intrusive and placing too strong of a burden on parties to comply with the requests or face sanctions.  The grounds for German concerns regarding U.S.-style discovery can be categorized in three groups; A) fear of extensive discovery being misused for purposes of industrial espionage, B) exaggerated media reports painting the picture of a dysfunctional U.S. justice system, and C) incompatibility with current policies regarding companies internal communications.

A. Fears of industrial espionage

A case that received particular attention in Germany was the Volkswagen case.[82]  The case was partially responsible for the German fear of the encroachment by U.S. litigants into domains reserved for German sovereignty.

In the Volkswagen case the U.S. plaintiffs alleged defective design and manufacture of a 1966 Volkswagen vehicle.[83]  They filed a personal injury action against Volkswagen in the Sacramento Superior Court.[84]  To substantiate their claim, the plaintiff sought discovery in the form of inspecting and taking pictures of departments with a Volkswagen manufacturing plant.[85]  The German embassy filed an amicus curie noting that it would violate German sovereignty and international law to grant the discovery request without requiring German approval via letters rogatory.[86]  While the Court of Appeals ultimately did find that letters rogatory would be the proper mechanism of accomplishing such a discovery request, the possibility of circumventing German courts made a strong impression in Germany. These concerns were probably intensified because the affected area involved possible trade secrets of one of Germany’s most important industries, the automobile industry.[87] 

B. Exaggerated media reports

From a German viewpoint, U.S. civil litigation is seen as extremely plaintiff friendly due to broad grants of discovery without particularly specific pleadings.  Judgments are often seen as excessive and news of outrageously high punitive damages receive a lot of public attention.  For example, the McDonald’s case was widely publicized in Germany and the U.S. legal system was ridiculed in the domestic and foreign media.[88]  In that case the Plaintiff, Stella Liebeck, spilled hot McDonald’s coffee and suffered third degree burns.[89]  She was hospitalized and required a skin graft.  It was later determined that the coffee was served at 180 degrees.[90]  What ultimately lead to the award of punitive damages was the fact that McDonald’s was aware of about 700 prior injuries to customers due to the hot coffee.[91]  Ms. Liebeck was found to be 20% at fault for holding the coffee between her legs while sitting in her car at the McDonald’s drive-through.[92]  The juries total damage award was later reduced from $2.7 million to $640.000.

The headlines, however, paint a very different picture.  A German article listing the most bizarre cases in the U.S. leads with a description of the McDonald’s case.[93]  It summarized the facts and concludes that in the U.S. millions can be had for spilled coffee.[94]  Most articles covering this case have focused on the dollar amount of the jury award.[95]  Bold headlines highlighting the $ 2.7 million punitive damages award is reflective of journalistic norms, placing the most important information first.[96]  The gory details of the scalding injury that were so prominent at trial are often omitted or understated, to strip the case of any legitimacy and make it sound more bizarre.

C. Incompatible record keeping policies for companies internal communications

Another reason is that German businesses that are not familiar with broad discovery requirements do not send internal documents with litigation in mind.[97]  As a result records can be very candid and can be filled with very damaging details.[98]  Certainly, many of the larger German corporations have in-house counsel familiar with American discovery requirements and therefore make appropriate changes to their record keeping policies.[99]  However, several smaller companies may not be able to afford this luxury.  On the other hand U.S. companies have policies that adequately protect them from broad disclosure requirements during litigation.

Taken together these concern have created the impression that U.S. courts are unacceptably expanding their powers by granting extraterritorial discovery on German soil.[100]  It can be seen as a violation of international law and sovereignty from with the Hague Evidence Convention was supposed to protect Germany.[101]  However, since the decision in Aerospatiale we know that U.S. courts can circumvent the Convention and still apply FRCP when evaluating a request for discovery.[102]  The practical implications are the German companies are forced to comply with the discovery orders, despite the fact that it would be counter to their own national laws.  That is because many German companies have significant assets in the U.S. that through the threat of sanctions motivate German litigants to comply.  However, his is not a desirable outcome.  While in the short term it may produce the desired results in a particular case, in the long term judicial comity is not advanced by this practice.

1. Why the current framework will not succeed

For those reasons mentioned above § 1782 will not achieve its stated purpose. It is unreasonable to expect Germany to adopt U.S. style discovery procedures.  Therefore, one of the purposes of § 1782 has failed, which was to influence foreign countries into adopting similar methods of discovery, or at least grant U.S. litigants discovery requests from a foreign court.  It has been shown to be more akin to wishful thinking than to a realistic expectation, as it has become evident that U.S. style discovery has and will continues to face much opposition abroad. 

The following dilemma remains.  In the two scenarios discussed here between the U.S. and Germany, parties are either in a U.S. or German court requesting evidence located in the territory of the other nation.  Due to §1782, a German party could potentially obtain the same level of discovery in a German court as in a U.S. court.  Conversely, this is not the case for the U.S. party.  A U.S. party in a German court would only be able to obtain the limited type of discovery afforded under German law, while remaining subject to U.S. style discovery due to § 1782.  Whether or not the evidence so obtained would ultimately be admissible in the German trial is still subject to German law, but at least the German side would be able to obtain information that the U.S. party cannot.[103] 

Similarly, German parties in U.S. courts, with the help of the German government, have been resisting U.S. style discovery of evidence located in Germany.[104]  With arguments of German sovereignty and through the passage of the Hague Convention, Germany has attempted to require U.S. litigants to obtain letters rogatory to German courts, who would then only grant discovery requests that met requirements under German civil procedure.[105]

The central concern remains that §1782 creates an unfair advantage to foreign litigants.  In addition the grant of discovery in a U.S. court can be seen as an affront against the German court; hindering international cooperation instead of advancing it.[106]  The Intel court was incorrect when it assumed a foreign country would not necessarily take offense to evidence obtained through § 1782 even though it would retain the ability to reject introduction of such evidence.[107]  A party may still receive an unfair advantage by merely being in possession of the information obtained through discovery.[108]  German courts are also ill equipped to deal with the attempted introduction of large quantities of documents.  Since broad discovery is not usual under the national rules, no streamlined procedure has been set up to evaluate such requests.

It should be noted that under the current framework of discretion by the district court judge it is possible to withhold the granting of a discovery request and make it conditional on the party agreeing to make the same level of discovery available to its counterpart.[109]  However, this does not mean that district courts will always provide for such a condition, and this is precisely why an amendment to § 1782 is necessary.

IV. Lessons from international commercial arbitration

            Having encountered the difficulties described above it should be no surprise that parties involved in international transactions often choose international commercial arbitration over litigation.[110]  Arbitration provides several procedural advantages over litigation.[111]  An important distinguishing aspect to court systems is that members of an arbitral tribunal are selected by either the parties or a contractually specified delegate.[112]  Arbitrators with expertise in the type of dispute are usually selected. With regards to procedure, parties engaged in international commercial arbitration often reach a middle ground on discoverability between common law and civil law through the use of institutional rules.  The procedural rules of institutional arbitration often only provide a general framework of the entire proceeding and leave specific evidentiary issues at the discretion of the tribunal.[113] 

The IBA Rules on the Taking of Evidence in International Arbitration (IBA Rules) have gained wide acceptance within the international arbitral community.[114]  These rules can be especially helpful where the parties come from different legal cultures.[115]  Even when parties have not expressly agreed to their application, it is possible that arbitral tribunals may reference these rules as gap filling provisions.[116]

The working group that created the IBA Rules spent a significant amount of time on the question of whether or not a party should be able to request production of documents in possession of another party.[117]  “The vigour with which this issue was debated demonstrated that the question of document production was the key area in which practitioners from common law countries and civil law countries differ. The debate produced a balanced approach that became a central aspect of the IBA Rules […] and has become widely accepted by both common law and civil law practitioners.”[118]

The IBA Rules, therefore, have produced a workable compromise between the common law and civil law approaches towards the taking of evidence. Article 3.3 of the IBA Rules provides the procedure for requesting the production of a document.[119]  For the request to be granted, a party must provide:

“[1] a description of each requested Document sufficient to identify it, or a description in sufficient detail (including subject matter) of a narrow and specific requested category of Documents that are reasonably believed to exist; in the case of Documents maintained in electronic form, the requesting Party may, or the Arbitral Tribunal may order that it shall be required to, identify specific files, search terms, individuals or other means of searching for such Documents in an efficient and economical manner; [2] a statement as to how the Documents requested are relevant to the case and material to its outcome; and [3] a statement that the Documents requested are not in the possession, custody or control of the requesting Party or a statement of the reasons why it would be unreasonably burdensome for the requesting Party to produce such Documents, and [4] a statement of the reasons why the requesting Party assumes the Documents requested are in the possession, custody or control of another Party.”[120]

The commentary to the IBA Rules clarifies that the identification of documents is the result of a compromise between the common law and civil law systems.  A concession from common law is to specifically identify documents whereas the civil law concedes to allow parties to request documents by category.[121]  “The Working Party and the Subcommittee did not want to open the door to ‘fishing expeditions’. However, it was understood that some documents would be relevant and material and properly produced to the other side, but that they may not be capable of specific identification. Indeed, all members of the Working Party and of the Subcommittee, from common law and civil law countries alike, recognised that arbitrators would generally accept such requests if they were carefully tailored to produce relevant and material documents.”[122]

While the courts have not made any such compromises, arbitration has.  Surely, this is part of the reason why arbitration has become so popular among transnational litigants.  As described above the different approaches with regard to the gathering of evidence is particularly pronounced between common- and civil law countries.

However, international commercial arbitration has its limits since it requires the consent of the parties.[123]  Therefore arbitration agreements do not fully resolve the difficulties transnational litigants face, because disputes could arise that involve parties not bound by such an agreement.  An example of this can be seen in the case Heraeus Kulzer, GmbH v. Bioment, Inc.[124]  Heraeus Kulzer is a German company and Biomet is from the U.S.[125]  Heraeus Kulzer manufactured bone cement and entered into a contractual relationship with Merck, another German company.  Heraeus had to provide confidential information about its bone cement to Merck, so that regulatory requirements would be met.[126]  Merck being in possession of this information became a concern for Heraeus when Merck entered into a joint venture with Bioment.[127]  This concern materialized when Bioment began producing bone cement similar to that of Heraeus.[128] 

Under these circumstances Heraeus Kulzer sued Biomet in a German court for theft of trade secrets.[129]  However, Heraeus sought broad discovery in a U.S. federal district court using § 1782.[130]  Using its discretion, the court found that Heraeus could obtain the same amount of discovery in Germany, as it could if it filed the lawsuit in the U.S. district court.[131]  The District Court reasoned that the German Court still had the opportunity to exclude the fruits of the U.S. discovery obtained, so it could not possibly do any harm.[132]  While the Court considered the potential for abuse and the lack of reciprocity for Biomet, it did not find that Heraeus made the request for discovery based on such motives.[133]

Two lessons can be drawn from this case.  First, because Heraeus suffered an injury by a third party, no contractual relationship between the two parties existed.  Therefore, while an arbitration clause is certainly smart lawyering to avoid the procedural difficulties of transnational litigation, it cannot protect companies in situations like this.  Arbitration is based on party consent and cannot be a complete substitute for transnational litigation.  A need for courts in different countries to effectively collaborate still exists.  Second, this case highlights the potential for abuse and inequalities with regard to discovery requests under § 1782.  Whereas Heraeus was able to obtain broad U.S. style discovery, Biomet was restricted to narrow German procedures.[134]  Additionally, it was conceivable that Heraeus could use the discovery requests to harass Biomet by making broad demands, resulting in great expense for Bioment.[135]  The following section will address the concerns arising from this case and suggest ways to improve upon the existing procedures.

A. Proposed congressional amendment to § 1782 to include parity requirement

Parity among litigants is not only a hallmark of due process, but it could even be seen as rising to the level of customary international law.  Equal treatment among opposing litigants is a fundamental right that should be expected to exist in any court or tribunal.[136]  Considering the status quo, this cannot be said to exist when foreign parties take advantage of 1782 discovery without giving reciprocal rights to U.S. litigants. 

While the Intel Court correctly interpreted the statute, it lead to an undesirable result based on the above policy considerations.  It would have been improper for the Court to insert a parity requirement into the statute when the language does not lead to such a conclusion.  Unlike the article proposes to change the interpretation of §1782.  A congressional amendment to §1782 to include a parity requirement would be the proper router.  The proposed language would add an additional requirement that: reciprocal discovery must be afforded in order for a request for discovery to be granted by a U.S. district court.  Without such language the decision to grant or deny a discovery request is too indeterminate and left to the district court’s discretion, which could lead to incongruent results.

Additionally these changes to §1782 should be made in order to further international cooperation between the courts and level the playing field between U.S. and foreign litigants.  Specifically this would require the court to only grant discovery requests where the same level of discovery will be granted to the U.S. party.

What others have suggested, to require U.S. courts to do a foreign law analysis, was rightly dismissed by the Intel case.[137]  It is not a workable solution to require U.S. judges to be so fluent in German law to be able to accurately determine whether a piece of evidence would be admitted in German court.  Prior to the Intel decision such attempts to impose a discoverability requirement into §1782 have lead to a “battle-by-affidavit of international legal experts.”[138]  The drafters of §1782 “did not want to have a request for cooperation turn into an unduly expensive and time-consuming fight about foreign law. […] They also realized that, although civil law countries do not have discovery rules similar to those of common law countries, they often do have quite different procedures for discovering information that could not properly be evaluated without a rather broad understanding of the subtleties of the applicable foreign system.”[139]

B. Proposed Principles and Rules of Transnational Civil Procedure

The American Law Institute (ALI) and International Institute for the Unification of Private Law (UNIDROIT) engaged in a project called “Principles and Rules of Transnational Civil Procedure.” The working group published principles that ultimately evolved into proposed rules of transnational procedure.  Their purpose is to serve as a model for individual nations to follow when enacting their own national legislation.  The scope of the proposed rules is limited, they still require that “[t]he procedural law of the forum must be applied in matters not addressed in these Rules.”[140] 

This means that the rules are supplementary and specifically address the areas unique to transnational litigation.  For matters not covered by the proposed rules, courts will still have to look towards the usual procedural rules.

With regard to the discovery of evidence these principles propose a middle ground between U.S. style discovery and the limited disclosure requirements typical of civil law jurisdictions.[141]  In addition to the principles, these two institutions drafted procedural rules as a template for national legislation of transnational litigation.  If these rules were to be adopted, transnational litigation would become its own separate legal field with distinct procedural rules. 

The proposed rules for transnational civil procedure have many aspects in common with the IBA Rules used in arbitration.  They require concessions from both common and civil law jurisdictions to achieve a workable middle ground.  A major concession for civil law jurisdictions would be the requirement to disclose evidence that may be adverse to the party.[142]  On the common law side, a typical request for “any and all” evidence relating to a certain topic would not be allowed.[143]  Instead evidence must be reasonably identified under the proposed rules.  The exact language of the rules reads as follows:

“Upon timely request of a party, the court should order disclosure of relevant, non-privileged, and reasonably identified evidence in the possession or control of another party or, if necessary and on just terms, of a nonparty. It is not a basis of objection to such disclosure that the evidence may be adverse to the party or person making the disclosure.”[144]

The commentary of the rules explains the source and reasoning used to arrive at the proposed compromise:

“The philosophy expressed in Rules 19, 20, 22, and 30 is essentially that of the common-law countries other than the United States. In those countries, the scope of discovery or disclosure is specified and limited, as in Rules 19 and 20. However within those specifications disclosure is generally a matter of right.”[145]

“Discovery under prevailing United States procedure, exemplified in the Federal Rules of Civil Procedure, is much broader, including the broad right to seek information that ‘appears reasonably calculated to lead to the discovery of admissible evidence.’ This broad discovery is often criticized as responsible for the increasing costs of the administration of justice. However, reasonable disclosure and exchange of evidence facilitates discovery of truth.”[146]

“Discovery under the civil-law systems is generally much more restricted, or nonexistent. In particular, a much broader immunity is conferred against disclosure of trade-and- business secrets. This Rule should be interpreted as seeking to strike a balance between the restrictive civil-law systems and the broader systems in common-law jurisdictions.”[147]

            These proposed rules have encountered some opposition from both commentators in civil law and common law jurisdictions.[148]  Criticism is often directed to the compromise made with regard to discovery procedures.[149]  From the civil law side it is argued that the burden and expense resulting from the discovery procedures is too great; that it is in essence too similar to U.S. civil procedure.[150]  On the other hand it is said that the lack of broad discovery in civil law jurisdictions impedes the access to justice and the truth finding process.[151]  These two systems are simply diametrically opposed and the compromise in these rules presents an “unacceptable social expense.”[152]

However, inaction also has its costs.  The status quo leaves the difficulties surrounding transnational discovery unresolved and would lead undoubtedly to greater confusion, delay and increased cost during litigation.  A compromise is simply necessary to bridge the gap between the two legal systems. The proposed rules “mediate the binary opposition between broad discovery and no discovery at all.”[153]

The criticism directed toward these proposed transnational rules can be seen as a typical symptom of any negotiating process.  Parties expected to make concessions tend to magnify their own and undervalue those made by the opposite side.[154]  U.S. parties do not see a reason why German parties should receive special treatment in U.S. proceedings and vice versa.[155]  Additionally, misunderstandings about both, the civil and common law systems, may be a contributing factor.[156]

In many law firms transnational litigation is a distinct area of practice that is staffed with specialists of different legal systems.[157]  Law schools have developed curricula that include new courses in with an international and comparative perspective.[158]  Some have even said that transnational litigation has entered a golden era.[159]  

Although there is general agreement that transnational litigation is on the rise and is likely going to continue to experience growth in the coming year, it is not the first time that U.S. courts have encountered change.[160]  Over the past 200 years the U.S. legal system has encountered economic, political, and social change yet the rules of civil procedure applied in transnational cases always closely resembled those applied in domestic cases.[161]

It remains to be seen whether this golden era will produce dramatic change through the implication of a distinct set of rules reserved for transnational cases, or whether a slow and systematic adaptation will take place as it has in the past.[162]  Either way change must take place; if it does not, transnational litigation will only become more time consuming and expensive as the caseload continues to increase.

                  Conclusion

            The civil- and common law systems of Germany and the U.S. have developed very different procedures for the discovery of evidence that under the current transnational framework are incompatible.  Germany has restrictive rules for obtaining evidence in order to protect parties from undue burden and being forced to reveal trade secrets.  The U.S. favors broad discovery practices for full disclosure of facts to determine the truth and encourage settlements.  Nonetheless, proceedings in international commercial arbitration have demonstrated that it is possible to successfully merge common and civil law principles and produce a compromise that is generally acceptable to both parties. 

The IBA Rules are the result of such a compromise and have enjoyed broad application in arbitration proceedings.  However, arbitration alone cannot completely replace transnational litigation.  While arbitration agreements are popular among those involved in international trade, certain disputes will still require dispute resolution through the court system.  This is where the proposed rules for transnational litigation provide a promising solution that would help to make this area of law function more effectively and increase equality among the parties.

            The expectations set by the passing of §1782 hoping that other nations would adopt discovery procedures similar to those in the United States were unreasonable and, as we have now seen, have failed to materialize.  Instead §1782 has caused American litigants to be placed at an unfair disadvantage as the burdens of extensive discovery can be extracted from within the U.S. without any such reciprocal obligation.  Therefore § 1782 needs to be amended to account for this imbalance and to only allow the type of discovery that both parties would be able to obtain.

[1] Gary Born, International Civil Litigation in United States Courts 849 (1996) citing Letter from Mr. von Bulow to George Bancroft (June 24, 1874), in Papers Relating to the Foreign Relations of the United States 446 (1874).

[2] Id.

[3] Id.

[4] Id.

[5] Samuel P. Baumgartner, Is Transnational Litigation Different?, 25 Univ. Pa. J. Int. Econ. Law 1297 (2004).

[6] Id. at 1380.

[7] Joint American Law Institute / UNIDROIT Working Group on Principles and Rules of Transnational Civil Procedure. Draft Rules Of TRANSNATIONAL CIVIL PROCEDURE WITH COMMENTS, available at http://www.unidroit.org/english/documents/2004/study76/s-76-12-e.pdf.

[8] Fed. R. Civ. P. 1 (“These […] rules shall be construed and administered to secure the just, speedy, and inexpensive determination of every action.”);  80 Petra Schaff, Schriften zum Prozessrecht: Discovery und andere Mittel der Sachverhaltsaufklarung im englischen Pre-Trial-Verfahren im Vergleich zum deutschen Zivilprozess, 129 (1983).

[9] 2 John Fellas & Alex Patchen, Transnational Litigation: A Practitioner’s Guide § 13:49 (2013) [hereinafter Fellas & Patchen].

[10] Id.

[11] Schaaff, supra note 8, at 128.

[12] Zivilprozessordnung [ZPO] [Code of Civil Procedure], Dec. 5, 2005, Bundesgesetzblatt [BGBl.] 3145, as amended, § 425 (Ger.).

[13] Peter Bert, Pre-Trial Discovery under the Hague Evidence Convention: Is Germany’s Position Softening? (2013) available at http://lettersblogatory.com/2013/08/26/pre-trial-discovery-under-the-hague-evidence-convention-is-germanys-position-softening/.

[14] John H. Langbein, The German Advantage in Civil Procedure, 52 U. Chi. L. Rev. 823, 826-27 (1985).

[15] Bavaria is one of Germany’s sixteen states with a population of 12.5 million.

[16] James R. Maxeiner et al., Failures of American Civil Justice 126 (2011).

[17] Id.

[18] Jan W. Bolt & Joseph K. Wheatley, Private Rules for International Discovery in U.S. District Court: The U.S. –German Example, 11 UCLA J. Int’l & Foreign Aff. 1, 3 (2006)

[19] Id.

[20] Baumgartner, supra note 5.

[21] Convention on the Taking of Evidence Abroad in Civil or Commercial Matters, Jul. 27, 1970, 23 U.S.T. 2555 [hereinafter Evidence Convention].

[22] Id.

[23] Richard H. Kreindler, Transnational Litigation: A Basic Primer 132 (1998).

[24] Id. at 66.

[25] Evidence Convention at 2555.

[26] Id.

[27] Id.

[28] Id.

[29] Gesetz zur Ausführung des Haager Übereinkommens vom 15. November 1965 über die Zustellung gerichtlicher und außergerichtlicher Schriftstücke im Ausland in Zivil- oder Handelssachen und des Haager Übereinkommens vom 18. März 1970 über die Beweisaufnahme im Ausland in Zivil- oder Handelssachen [Haager Übereinkommen Ausführungsgesetz] [HaagÜbkAG] [Enactment of Hague Convention], Dec. 22, 1977, BGBl. I at 3105 (Ger.), available at http://www.gesetze-im-internet.de/bundesrecht/haag_bkag/gesamt.pdf.

[30] Fellas & Patchen, supra note 11, at § 13:50.

[31] Evidence Convention.

[32] Schaaff, supra note 8, at 159.

[33] Id. at 158.

[34] Id.

[35] Kreindler, supra note 23, at 161.

[36] Id.

[37] John H. Langbein et al., History of the Common Law 401 (2009).

[38] John H. Langbein, On the Myth of Written Constitutions: The Disappearance of Criminal Jury Trials, 15 Harv. J. Law Public Policy 119 (1992).

[39] Maxeiner, supra note 16, at 126.

[40] Id. at 128.

[41] Maxeiner, supra note 16, at 128.

[42] Id.

[43] See supra note 2.

[44] Fed. R. Civ. P. 26(b)(1).

[45] Fed. R. Evid. 401.

[46] Fed. R. Civ. P. 26(a).

[47] Born, supra note 1, at 845.

[48] Id.

[49] Id.

[50] Id.

[51] Born, supra note 1, at 845.

[52] Id.

[53] Id. at 18.

[54] Fed. R. Civ. P. 68(d).

[55] 28 U.S.C. § 1782 (2013).

[56] Harold G. Maier, Extraterritorial Discovery: Cooperation, Coercion and the Hague Evidence Convention, 19 Vand. J. Transnat’l L. 239, 242 (1986).

[57] Hilton v. Guyot, 159 U.S. 113, 163-64 (1895). 

[58] Luis A. Perez & Frank Cruz-Alvarez, 28 U.S.C. § 1782: The Most Powerful Discovery Weapon in the Hands of a Foreign Litigant, 5 FIU L. Rev. 177 (2009) (describing 28 U.S.C. § 1782 as a “foreign litigants most powerful discovery weapon against a U.S. entity in a foreign proceeding.”);  The statute was generally expanded as time went on, not only in scope of discovery but also with regard to the definition of the term ‘foreign proceeding’ which now includes arbitral tribunals.  For a detailed description regarding the history of 28 U.S.C. §1782 and its different amendments, see Extra-Statutory Discovery Requirements: Violating the Twin Purposes of 28 U.S.. Section 1782 29 Vand. J. Transnat’l L. 117, 121-129 (1996).

[59] In re Application of Gianoli, 3 F.4d 54, 58 (2d Cir. 1993), cert. denied, 114 S. Ct. 443 (1993) (citing In re Application of Malev Hungarian Airlines, 964 F.2d 97, 100 (2d Cir. 1992), cert. denied, 113 S. Ct. 179 (1992)).

[60] 28 U.S.C. § 1782 (2013).

[61] Kreindler, supra note 23, at 66.

[62] Intel Corp. v. Advanced Micro Devices, Inc., 542 U.S. 241, 256-57 (2004).

[63] Id. at 245.

[64] Id.

[65] Id. at 267.

[66] Marat A. Massen, Discovery for Foreign Proceedings After Intel v. Advanced Micro Devices: A Critical Analysis of 28 U.S.C. § 1782 Jurisprudence, 83 S. Cal L. Rev. 875, 899 (2010).

[67] Id. at 876.

[68] Id. at 261-262.

[69] Massen, supra note 66, at 876.

[70] Daniel A. Losk, Section 1782 (A) After Intel: Reconciling Policy Considerations and a Proposed Framework to Extend Judicial Assistance to International Arbitral Tribunals, 27 Cardozo L. Rev. 1035 (2005).

[71] Societe Nationale Industrielle Aérospatiale v. United States Dist. Court for S. Dist., 482 U.S. 522 (1987).

[72] Id. at 525.

[73] Id.

[74] Id. at 525-526.

[75] Id.

[76] Id. at 529.

[77] Id. at 538.

[78] Paul R. Dubinsky, Is Transnational Litigation a Distinct Field? The Persistence of Exceptionalism in American Procedural Law, 44 Stan. J. Int’l L. 301, 318 (2008).

[79] Dubinsky, supra note 76.

[80] Id.

[81] Maxeiner, supra note 16.

[82] Volkswagen Aktiengesellschaft v. Superior Court, 33 Cal. App. 3d 503 (Cal. Ct. App. 1973).

[83] Id.

[84] Id. at 505

[85] Id.

[86] Volkswagen Aktiengesellschaft v. Superior Court, 33 Cal. App. 3d 503, 505 (Cal. Ct. App. 1973).

[87] Schaaff, supra note 8, at 159.

[88] Liebeck v. McDonald’s Rest., P.T.S. Inc., 1995 WL 360309 (N.M. Dist. Ct. 1994);  For an extensive study on the media’s treatment of the Liebeck case, see Michael McCann et. al., Java Jive: Genealogy of a Juridical Icon, 56 U. Miami L. Rev. 113, 130-169 (2001).

[89] Liebeck v. McDonald’s Rest., P.T.S. Inc., 1995 WL 360309 (N.M. Dist. Ct. 1994).

[90] Id.

[91] Id.

[92] Id.

[93] Miriam Walker, Die Skurrilsten Klagen in Amerika, Web.de, http://web.de/magazine/nachrichten/panorama/6964440-skurrilsten-klagen-amerika.html

[94] Id.

[95] McCann, supra note 88, at 137.

[96] Id.

[97] Bolt, supra note 18, at 6.

[98] Id.

[99] Id.

[100] Peter Schlosser, Der Justizkonflikt zwischen den USA und Europa 15 (1985.)

[101] Schlosser, supra note 100.

[102] Societe Nationale Industrielle Aérospatiale v. United States Dist. Court for S. Dist., 482 U.S. 522 (1987).

[103] Maassen, supra note 66, at 882.

[104] Volkswagen Aktiengesellschaft v. Superior Court, 33 Cal. App. 3d 503 (Cal. Ct. App. 1973).

[105] Id.

[106] Maasen, supra note 66, at 882.

[107] Intel Corp. v. Advanced Micro Devices, Inc., 542 U.S. 241, 261-62 (2004).

[108] Maasen, supra note 66, at 882.

[109] Hans Smit, American Assistance to Litigation in Foreign and International Tribunals: Section 1782 of Title 28 of the U.S.C. Revisited, 25 Syracuse J. Int’l L. & Com. 1, 13 (1998).

[110] Losk, supra note 68, at 1046.

[111] Born, supra  note 1, at 221.

[112] Id.

[113] Tobias Zuberbühler et. al., IBA Rules of Evidence: Commentary on the IBA Rules on the Taking of Evidence in International Arbitration, 4 (2012). (For example the ICC procedural rules state in Art. 25 “The arbitral tribunal shall proceed within as short a time as possible to establish the facts of the case by all appropriate means.” and similarly ICSID Arbitration Rule 22 (3) states broadly that “The Commission, in order to obtain information that might enable it to discharge its functions, may at any stage of the proceeding:

(a) request from either party oral explanations, documents and other information;

(b) request evidence from other persons; and

(c) with the consent of the party concerned, visit any place connected with the dispute or conduct inquiries there, provided that the parties may participate in any such visits and inquiries.”)

[114] IBA Rules on the Taking of Evidence in International Arbitration, Foreword (2010), available at http://www.ibanet.org/Publications/publications_IBA_guides_and_free_materials.aspx#takingevidence [hereinafter IBA Rules].

[115] Id.

[116] Zuberbühler, supra note 115 at 4.

[117] Commentary on the IBA Rules on the Taking of Evidence in International Arbitration (2010), available at http://www.ibanet.org/Publications/publications_IBA_guides_and_free_materials.aspx#takingevidence [hereinafter IBA Rules].

[118] Id.

[119] IBA Rules at Art. 3.3.

[120] IBA Rules at Art. 3.3.

[121] Commentary on the IBA Rules on the Taking of Evidence in International Arbitration (2010), available at http://www.ibanet.org/Publications/publications_IBA_guides_and_free_materials.aspx#takingevidence [hereinafter IBA Rules].

[122] Commentary on the IBA Rules on the Taking of Evidence in International Arbitration (2010), available at http://www.ibanet.org/Publications/publications_IBA_guides_and_free_materials.aspx#takingevidence [hereinafter IBA Rules].

[123] Born, supra note 1, at 218.

[124] Heraeus Kulzer, GmbH v. Biomet, Inc., 633 F.3d 591 (7th Cir. 2011).

[125] Id.

[126] Id.

[127] Id.

[128] Id.

[129] Heraeus Kulzer, GmbH v. Biomet, Inc., 633 F.3d 591 (7th Cir. 2011).

[130] Id.

[131] Id.

[132] Id.

[133] Id.

[134] Id.

[135] Id. at 595.

[136] U.S. Const. amend. VI;  European Convention for the Protection of Human Rights and Fundamental Freedoms, art. 6, Sept. 3 1953, 213 UNTS 221.

[137] Intel Corp. v. Advanced Micro Devices, Inc., 542 U.S. 241, 261 (2004).

[138] Vand. J. Transnat’l L., Note, Extra-Statutory Discovery Requirements: Violating the Twin Purposes of 28 U.S.C. Section 1782, 29 Vand. J. Transnat’l L. 117, 151 (1996), citing Euromepa, S.A. v. R. Esmerian, Inc., 51 F.3d 1095, 1099 (2d Cir. 1995).

[139] Hans Smit, Recent Developments in International Litigation, 35 S. Tex. L. J. 215, 235 (1994).

[140] G. C. Hazard Jr. et. al., International Institute for the Unification of Private Law (UNIDROIT) & American Law Institute (ALI), Draft Rules of Transnational Civil Procedure with Comments (2004) available at http://www.unidroit.org/english/documents/2004/study76/s-76-12-e.pdf [hereinafter Draft Rules].

[141] G. C. Hazard Jr. et. al., International Institute for the Unification of Private Law (UNIDROIT) & American Law Institute (ALI), Draft Principles of Transnational Civil Procedure with Comments (2004) available at http://www.unidroit.org/english/principles/civilprocedure/ali-unidroitprinciples-e.pdf.

[142] Draft Rules at § 20.

[143] Id.

[144] Id.

[145] Draft Rules at C20-3.

[146] Id. at C20-4.

[147] Id. at C20-5.

[148] Antonio Gidi et. al., Notes on Criticizing the Proposed ALI / UNIDROIT Principles and Rules of Transnational Civil Procedure, 6 Uniform L. Rev. 819, 821 (2007) available at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1016886.

[149] Gidi, supra note 148.

[150] Id.

[151] Id.

[152] Id.

[153] Id.

[154] Id. at 824.

[155] Bolt, supra note 18, at 3.

[156] Id.

[157] Dubinsky, supra note 76, at 301.

[158] Dubinsky, supra note 76, at 301.

[159] Id.

[160] Id. at 304.

[161] Id. at 305.

[162] Id. at 356.

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