You read it here first, back in 2013, but at the time with a question mark, and then again in 2014 and 2015. Finally, 2017 is the year it is actually going to happen: Germany is about to change its approach to discovery of documents under the Convention of 18 March 1970 on the Taking of Evidence Abroad in Civil or Commercial Matters, commonly known as the Hague Evidence Convention. The bill that would remove Germany’s reservation pursuant to Article 23 of the Convention* has been introduced into Parliament. It passed the Upper Chamber (Bundesrat) late last year without any objections.
What will change?
The following provision is to be introduced into the German Act on the Implementation of the Hague Evidence Convention (Ausführungsgesetz; AusfG HBÜ)**:
|§ 14||Sec. 14|
|Rechtshilfeersuchen, die ein Verfahren nach Artikel 23 des Übereinkommens zum Gegenstand haben, werden nur erledigt, wenn||Letters of Request that relate to a procedure pursuant to Article 23 of the Convention shall only be executed if|
|1. die vorzulegenden Dokumente genau bezeichnet sind,||1. the documents the production of which is requested are precisely specified,|
|2. die vorzulegenden Dokumente für das jeweilige Verfahren und dessen Ausgang von Bedeutung sind,||2. the documents the production of which is requested are of relevance for the proceedings in question and for its outcome,|
|3. die vorzulegenden Dokumente sich im Besitz einer an dem Verfahren beteiligten Partei befinden,||3. the documents the production of which is requested are in the possession of a party to the proceedings,|
|4. das Herausgabeverlangen nicht gegen wesentliche Grundsätze des deutschen Rechts verstößt.||4. if the production request does not violate fundamental principles of German law.|
The proposal put forward by the Ministry in 2014 was more broadly worded. It only required that the documents were specified and that it was shown why the documents were relevant to the outcome.*** So apparently, the comments during the legislative process, which I have summarized here, have been taken on board by the Ministery.
Sec. 14 AusfG HBÜ will be replacing the previous provision that granted authority to the Federal Ministry of Justice to issue a regulation (Verordnung) dealing with discovery of documents, an authority that the Federal Ministry for 40 years – the AusfG HBÜ came into force in 1977 – did not exercise. In 1989, that is, after the US Supreme Court’s 1987 Aerospatiale decision, a draft regulation was produced and discussed, but met with strong resistance amongst the federal states and therefore never was implemented.
The proposed legislation is part of a bill containing several changes to German private international law and international civil procedure (Gesetz zur Änderung von Vorschriften im Bereich des Internationalen Privat- und Zivilverfahrensrechts).The other proposed changes, in my view, are far less exciting and mainly technical. Given, however, the long tradition of opposing pre-trial discovery of documents, culminating in what became known as Justizkonflikt, the new Section 14 AusfG HBÜ reflects a fundamental change in policy.
What’s behind the new policy?
Here is my summary of the reasons given in the legislative materials:
Given that Germany does not execute letters of request for pre-trial discovery of documents, the US courts resort to the extraterritorial application of their domestic rules, in particular to Sections 26, 34 Federal Rules of Civil Procedure (FCPR). The US Supreme Court has approved this practice in the Aerospatiale ruling (482 U.S. 522 (1987), based on an understanding that the Hague Evidence Convention does not apply exclusively to the cross-border taking of evidence amongst member states and thus does not preclude the application of national law. Being subject to discovery under the FCPR is both burdensome and disadvantageous for German parties. In particular, they do not enjoy the protection under Articles 11 and 12 of the Convention.
The new provision is expressly designed as an incentive for the US courts to use the Hague Evidence Convention. The legislative materials note that the US courts’ reliance of the FCPR would be permissible only as long as Germany’s reservation pursuant to Article 23 meant that letters of request had no chance of being executed. Once the US courts could rely on effective and speedy execution of letters of request, comity would require them to apply the Convention. The materials further note that other Hague Convention member states such as France, Denmark, Finland, the Netherlands, Sweden and the U.K. have taken similar steps and have modified their Article 23 reservations, an approach that is not only permissible, but that has also been recommended by the Hague Conference’s special commissions.
One of the things that strike me is that, pursuant to the third criterion of Section 14 AusfG HBÜ, no order for the production of documents by a third party can be made. Given that the domestic Code of Civil Procedure (Zivilprozessordnung, ZPO) in Section 142 ZPO provides that a court can order a third party to produce a document – admittedly, a provision that is very narrowly construed and hardly ever used – discovery under the Hague Evidence Convention falls short of the standard applied in domestic litigation. The legislative materials mention third-party document production pursuant to Section 142 ZPO but remain silent on the reasons for not allowing third-party disclosure under the Hague Evidence Convention pursuant to the same standard that is applied domestically.
The restriction on third party discovery would be of particular relevance, I guess, in the context of groups of companies: Let’s assume that the foreign subsidiary of a German parent company is involved in litigation abroad, and discovery of documents is sought from the German parent company. Unless the German parent itself is a party to the underlying proceedings, the letter of request would not be executed. This will of course create an incentive on part of the foreign litigants to involve the German parent company in the litigation abroad.
Will it work in practice?
Whether things really change now will depend primarily on three things: On the US courts to rely on letters of request under the Convention instead of relying on the FCPR, on the willingness of common law litigants to restrain their document production requests so as to be admissible under Section 14 AusfG HBÜ, and on the approach the German courts take in interpreting Section 14 AusfG HBÜ. Most of the comments during the legislative process were sceptical whether the US Courts will change their attitude.
In line with efforts to increase the level of specialisation in the court system, the federal states will be given the power to designate a local court (Amtsgericht) that will have jurisdiction to deal with all letters of request and related matters for all or parts of the state. Ideally, these courts will then have the critical mass of incoming letters of request to build up the required expertise.
* Article 23 reads: “A Contracting State may at the time of signature, ratification or accession declare that it will not execute Letters of Request issued for the purpose of obtaining pre-trial discovery of documents is known in common law countries.”
** 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- und Handelssachen vom 22. Dezember 1977.
*** Die Bundesrepublik Deutschland wird Ersuchen nach Art. 23 HBÜ, die sich auf die Vorlage von Dokumenten beziehen, nur ausführen, wenn
a) die vorzulegenden Dokumente genau bezeichnet sind und
b) ausreichend und überzeugend dargelegt wird, warum diese Dokumente für den jeweiligen Fall und dessen Ausgang von Bedeutung sind.
Cartoon courtesy of and copyright by Stu Rees