No fishing allowed: Key lessons from the rejection of cross-border letter of request in high value fraud case

Background to letter of request

The Applicant (Alpha) had commenced a claim in the United States Bankruptcy Court for the District of Delaware (Delaware Claim) arising out of alleged fraudulent transfers totalling US$533 million made shortly before Alpha’s insolvency, which had in turn been transferred to OCI Limited (OCI), an English company.

On the application of Alpha, the Delaware court sent a letter of request (LOR) to the High Court requesting the High Court to order OCI and two individuals (English Respondents) to produce documents and/or give sworn testimony relevant to tracing the (allegedly) fraudulently transferred assets. The English Respondents were not parties to the Delaware Claim.

The High Court made an order giving effect to the LOR (Order). However, the English Respondents applied to set the Order aside, claiming that the LOR was oppressive and represented an illegitimate attempt to obtain pre-trial discovery rather than evidence for trial (Application). In reply, Alpha argued that judicial comity required the High Court to recognise and give effect to the LOR.

Making a letter of request to the High Court

The application was made pursuant to the  Hague Convention on the Taking of Evidence Abroad in Civil or Commercial Matters (Hague Convention) which provides for courts of signatory countries to assist each other in the provision of testimony and documents for use in judicial proceedings. The Hague Convention was given statutory effect in England by the Evidence (Proceedings in Other Jurisdictions) Act 1975 (1975 Act), providing the English court with the discretionary power to comply with letters of request from judicial authorities in foreign jurisdictions. In general, the English court will exercise its discretion to grant the order requested as far as possible, unless it finds that it does not have jurisdiction or such application is frivolous, vexatious or an abuse of process of the court[1].

There are express restrictions on what can be requested under the 1975 Act. As a matter of English legal principle, the English court will not make orders in the aid of pre-trial discovery.  Of particular relevance to Alpha’s application was section 2(4), which provides that an order under the 1975 Act cannot require a person to (a) give what amounts to discovery or (b) produce any documents, other than particular documents specified in the order.

Looking behind the detail in a letter of request

In considering the English Respondent’s Application, the High Court acknowledged that there must be good reasons not to accede to a letter of request and that comity requires a high degree of deference to be given to the request from the foreign court seeking assistance. The High Court observed that in the context of international fraud, cooperation between courts is of particular importance. However, as the LOR was not the product of a contested hearing in Delaware, the High Court concluded that it was appropriate to look in “broad terms” at the type of information that was sought by the LOR in order to assess the validity of the request.

Fishing for information or requesting evidence for trial?

The High Court first analysed the distinction between information and evidence, and the type of requests that can constitute “fishing”[2], and noted that fishing occurs when a request is focused on obtaining information in order to raise allegations of fact, rather than requesting evidence of a probative value to support existing factual assertions.

The High Court found that whilst the use of words such as “discovery” and “information” are not necessarily determinative of “fishing”, the LOR did seek information regarding matters not yet pleaded in the Delaware Claim. Even more conclusive evidence of fishing was the fact that the defendant in the Delaware Claim had failed to give discovery and, as a consequence and that instead Alpha were trying to get discovery in England.

The High Court accordingly determined that the substance of the LOR was “the obtaining of information from the Respondents rather than evidence for trial” with the consequence that that the LOR was outside the scope of the 1975 Act and the High Court did not have the jurisdiction to grant the order requested.

 When does oppression arise?

 The English court has previously held that it must also refuse a letter of request if it considers it to be oppressive, for example “where a party would be obliged to give information (or for that matter evidence) to be used to make them a defendant in the claim”[3]. In undertaking its assessment of the Respondent’s Application in this case the High Court:

• found that in order to raise oppression, the English Respondents were not required to allege an “improper purpose”. The motives of Alpha (improper or otherwise), were not relevant to the Court’s assessment, but rather the “objective consequences” for the English Respondents; and
• decided that the risk of fraud claims being made against the English Respondents in the Delaware Claim made the LOR oppressive, given the limits on the jurisdiction expressed in the 1975 Act.

Ultimately, the High Court found that “predominant consequence” of the Order was to seek to force the English Respondents (under threat of committal) to provide evidence which would be used to frame a fraud claim against them, and it was therefore held to be oppressive. 

What precision is required?

The High Court also provided practical guidance on the ambit of letters of request:

• document classes should be drawn so as to capture specific documents or a “compendious description of several documents”[4];
• any description must be sufficiently certain so that the recipient of the request knows the particular document or documents they need disclose;
• it is not sufficient to define a class of documents by asking for “all documents and communications” which fall within that class;
• requests should not seek types of information which it is only assumed will be available from documents, as this is indicative of the difference between fishing for information and requesting evidence; and
• whilst the Court can strike out parts of a substantively compliant letter of request, it is not the court’s role to rewrite a request.

What can we learn from Byju’s Alpha in the Cayman Islands?

The Hague Convention applies in the Cayman Islands, having been extended to the Cayman Islands and given legislative force by the Evidence (Proceedings in Foreign Jurisdictions) (Cayman Islands) Order 1978 (Order), extending the relevant sections of the 1975 Act.

How do the Cayman courts approach incoming letters of request?

The Cayman court has held that, in deciding whether to make an order giving effect to a letter of request from a foreign court, it will expect a letter of request to be proper, practicable, and permissible under local law[5], but will generally seek to assist the foreign court out of judicial and international comity. It will apply a clear set of principles, including that the letter of request must be sufficiently precise and not amount to an impermissible fishing expedition or a form of general pre-trial discovery (thereby echoing the position taken by the English courts). The Cayman court will accept or reject requests in whole or in part and may delete excessive elements but will not recast or substitute the categories of evidence sought[6]. Practitioners should avoid overbroad or speculative requests and instead focus on tailoring letters of request to meet the Cayman court’s procedural expectations.

What are the key considerations when drafting an outgoing letter of request from the Cayman Islands?  

When preparing an outgoing letter of request, practitioners must ensure that it aligns with both Cayman procedural expectations and the laws of the requested jurisdiction.  Requests must be framed in a manner consistent with the evidentiary standards of the receiving court.

For example, whilst the US, UK and Hong Kong are all signatories to the Hague Convention, they implement it differently. US practice tends to permit broad discovery, but the courts of the UK, the Cayman Islands and other English common law jurisdictions will order discovery on a more narrow basis. To avoid the pitfalls identified in Byju’s Alpha, an outgoing letter of request should be limited to the ambit set out above.

[1] Rio Tinto Zinc Corporation v Westinghouse Electrical Corporation [1978] AC 547

[2] The State of Minnesota v Philip Morris Inc [1998] I.L.Pr. 170

[3] First American Corporation v Zayed [1999] 1 WLR 1154

[4] Tajik Aluminium Plant v Hydro Aluminium AS [2005] EWCA Civ 1218

[5] Securities and Exchange Commission v Terraform Labs (unreported) 13 December 2023

[6] Ibid.