UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA __________________________________ ) In re Application of THE ISLAMIC ) REPUBLIC OF PAKISTAN for an ) Order Permitting Discovery Pursuant ) to

, ) ) Misc. Action No. 18-103 (RMC) Petitioner, ) ) v. ) ) ARNOLD & PORTER KAYE ) SCHOLER LLP, ) ) Respondent. ) __________________________________ )

MEMORANDUM OPINION

The Islamic Republic of Pakistan submits an Application to this Court for an

order permitting it to take discovery of the law firm of Arnold & Porter Kaye Scholer LLP.

Pakistan contends that Arnold & Porter possesses backup tapes of electronic records that

evidence corrupt activities by the firm’s client, Karkey Karadeniz Elektrik Uretim A.S., in

relation to the award of a large government contract from Pakistan in 2008. Those alleged

corrupt activities are the subject of both an official Pakistani corruption investigation and an

international arbitration. Arnold & Porter objects to discovery on multiple grounds, most crucial

being that it does not now have, and has never had, possession, custody, or control of the backup

tapes. For the reasons discussed below, the Court will grant in part and deny in part the

Application.

I. BACKGROUND

There are no disputes about the facts below unless identified.

1 Pakistan experienced a major energy crisis between 2006 and 2007. In response,

it initiated a policy of power generation through the Rental Power Projects Program. Karkey

builds and operates “Powerships”—ships with mounted power generation equipment that can be

sailed around the world and connected to the electric grid of countries in need of power. Like

other power providers, Karkey bid for and was awarded a contract (as specific to Karkey, the

Contract) with Lakhra Power Generation Company Ltd., a company owned by the Pakistani

government, to set up ship-mounted power generation units near Karachi, Pakistan.

When a member of Parliament complained to the Supreme Court of Pakistan

about the Rental Power Projects Program, that Court opened a case into government corruption

and convened a three-judge panel to hear it. In a January 2010 report, the Asian Development

Bank reported that there were “many inconsistencies” in the Rental Power Projects contracts.

See Ex Parte Appl. for an Order Permitting Discovery Pursuant to

(Appl.)

[Dkt. 1], Ex. B, Asian Development Bank, Islamic Republic of Pakistan: Rental Power Review

(2010) [Dkt. 1-2] ¶¶ 7, 11. On March 30, 2012, the Supreme Court of Pakistan issued a

judgment that held that all contracts under the Rental Power Projects Program violated Pakistani

Procurement Rules because government functionaries and project contractors had been “prima

facie involved in corruption”; the Supreme Court of Pakistan declared that all such contracts

were void ab initio. Appl., Ex. A, Karkey Karadeniz Elektrik Uretim A.S. v. Islamic Republic of

Pakistan, ICSID Case No. ARB/13/1 (Aug. 22, 2017) (ICSID Award) [Dkt. 1-1]. Without

making any specific or general finding of corruption beyond “prima facie,” and without any

general or specific findings as to Karkey, the Supreme Court ordered Pakistan’s National

Accountability Bureau (occasionally, NAB) to investigate possible corruption by Pakistani

officials and all contractors, including Karkey.

.

2 As a result, Karkey’s bank accounts in Pakistan were frozen, as were its vessels,

until the NAB inquiry was complete. See Appl., Ex. E, Letter from NAB to the Maritime

Security Agency (April 2, 2012) [Dkt. 1-5]. Thereafter, the National Accountability Bureau

conducted “a detailed examination of all accounts and documents” related to Karkey’s power

supply contract and agreed, by “Deed” dated September 7, 2012, to settle Karkey’s account for

$17 million USD and expressly to clear Karkey of all liability under the Pakistani National

Accountability Ordinance. ICSID Award ¶ 136.

The Deed stated that “KARKEY has no liability, and there remains no basis or

evidence for proceeding(s) by NAB or any of the other Parties or GoP [Government of Pakistan]

entities against KARKEY and/or its project/investment and that NAB has completed and closed

its enquiry in respect of KARKEY.”

The Deed was signed by the Director General of NAB

and provided for payment by Karkey of $17.2 million USD to settle all matters arising from the

contract, the Supreme Court’s judgment, and the NAB inquiry.

. In addition, in

October 2012, the National Accountability Bureau issued a “No Objection Certificate”

confirming that it was satisfied that Karkey had no liability under Pakistan’s anti­corruption law,

and that the National Accountability Bureau had “completed and closed its inquiry [in respect of

Karkey]” so that Karkey could retrieve its ships and equipment.

. The Supreme Court

of Pakistan then unilaterally abrogated the Deed and No Objection Certificate and ordered the

National Accountability Bureau to recover $120 million USD from Karkey before Karkey’s

vessels could be released.

. Again, however, the Supreme Court of Pakistan made

no findings and stated no conclusion as to whether Karkey had engaged in corruption.

In January 2013, the Supreme Court of Pakistan directed the National

Accountability Bureau to pursue criminal charges against individuals involved in the Rental

3 Power Projects and even to arrest them.

. In response, the Chairman of the National

Accountability Bureau wrote to the President of Pakistan expressing concern with these

directives: by “becoming involved in guiding investigations,” the Supreme Court was

encroaching on NAB’s independence and “placing extreme pressure on NAB personnel who

appear before” the Supreme Court.

. The NAB Chairman also warned that pressure

from the Supreme Court created a “danger of unfair investigation being resorted to.”

The

Supreme Court responded by issuing a contempt order accusing the NAB Chairman of “causing

interference with and obstruction in the process of the Court and . . . the administration of

justice.”

. As a result, since 2013 the National Accountability Bureau has pursued and

continues to pursue charges against those involved in the Rental Power Projects. Karkey states

that one of its vessels was detained for more than two years and its other three vessels remain in

Pakistan’s possession.

A. Arbitration Proceedings

Also in January 2013, Karkey initiated arbitral proceedings against Pakistan

before an International Centre for Settlement of Investment Disputes (ICSID) Tribunal, pursuant

to the Convention on the Settlement of Investment Disputes Between States and Nationals of

Other States. See

; see also ICSID Convention, Mar. 18, 1965, 17 U.S.T. 1270. 1 Pakistan

consented to the submission of investment disputes by Turkish investors to ICSID through a

Bilateral Investment Treaty (BIT). See ICSID Award ¶ 1.

A tribunal of three international arbitrators was selected to conduct the arbitration

and pre-arbitration proceedings. In the arbitration, Karkey claimed that Pakistan violated the

1 “The ICSID Convention is a multilateral treaty formulated by the Executive Directors of the World Bank to further the Bank’s objective of promoting international investment.” About ICSID, ICSID, https://icsid.worldbank.org/en/Pages/about/default.aspx (last visited Apr. 4 2019).

4 Contract when the Supreme Court of Pakistan made the “arbitrary” decision that the Contract

was void ab initio. Opp’n at 9. Pakistan argued that Karkey was not entitled to relief because it

had fraudulently or corruptly procured the Contract and, thus, the Arbitral Tribunal lacked

jurisdiction to hear Karkey’s case under the Bilateral Investment Treaty.

In preparation for the actual arbitration hearing, the parties engaged in discovery

for years under procedures established by the Arbitral Tribunal, for which the International Bar

Association (IBA) Rules on the Taking of Evidence in International Arbitration (2010) provided

guidance. Under the IBA Rules, a party seeking discovery must identify “a narrow and specific

requested category of Documents that are reasonably believed to exist” and satisfy the arbitrators

that that the requested documents are “relevant to the case and material to its outcome.” IBA

Rules Arts. 3.3(a), 3.7. The IBA Rules permit a party to object to the production of evidence if it

would entail an “unreasonable burden to produce the requested evidence,” or based on

“considerations of procedural economy, proportionality, fairness or equality of the Parties that

the Arbitral Tribune determines to be compelling.”

Arts. 9.2(c), 9.2(g).

The ICSID Convention also contains ICSID Arbitration Rules. See ICSID

Convention, Arts. 6(1)(c), 44; ICSID Arbitration Rules. Rule 34(2) of the ICSID Arbitration

Rules provides that “[t]he Tribunal may, if it deems it necessary at any stage of the proceeding:

(a) call upon the parties to produce documents, witnesses and experts . . . .” Article 43 of the

Convention also provides that “the Tribunal may, if it deems it necessary at any stage of the

proceedings, (a) call upon the parties to produce documents or evidence . . . .” ICSID

Convention Art. 43.

During the course of pre-hearing discovery, both sides produced documents to the

other. Early in that process, Karkey informed Pakistan that some (but not all) of Karkey’s

5 electronic files from prior to April 2010 had been archived to 70 backup tapes (the Backup

Tapes) and that those documents would not be accessible without undue burden and expense and

may not be recoverable at all due to outdated technology.

Pakistan complained volubly about not receiving relevant documents from the

Backup Tapes and submitted three separate requests to the Arbitrators, seeking orders to Karkey

to restore and search the tapes. Since the Backup Tapes are at the heart of the instant request for

assistance, the Court details those requests to the Arbitral Tribunal.

1. Pakistan’s First Request 2

Pakistan filed its first application for a Tribunal order in April 2015, explicitly

recognizing the Tribunal’s discretion to “exclude from production any document which it would

be unreasonably burdensome to produce” and that “recovering documents from backup tapes is

not a straightforward task.” Resp’t’s Opp’n to Appl. For an Order Permitting Discovery

Pursuant to

(Opp’n) [Dkt. 13], Ex. A, Karkey’s Counter-Memorial on

Annulment (Counter-Mem.) [Dkt. 13-1] ¶ 58. Karkey replied that “[b]ecause of the number of

Backup Tapes and their format, restoring the data on them in a manner that would allow Karkey

to search for responsive documents would be extremely costly and time-consuming, and might

not even be possible.”

. Instead, Karkey certified to the Tribunal that it had collected,

searched, reviewed, and produced all accessible and responsive pre-April 2010 documents,

including email.

. The Tribunal made no decision on the Backup Tapes before the next

request from Pakistan.

2 Arnold & Porter describes the First Request as two separate requests; the Tribunal treated them as a single request. For consistency, the Court adopts the Tribunal’s framing.

6 On July 24, 2015, Pakistan again asked the Tribunal to order Karkey to restore the

Backup Tapes.

. Karkey objected, repeating that it had already collected, reviewed and

produced responsive electronic and hard copy files from prior to April 2010, to the extent that

they had been maintained by individual custodians or found in databases or in files.

Karkey

also noted that Pakistan had failed to identify a narrow and specific category of requested

documents, as required by the IBA Rules.

The Tribunal denied Pakistan's request on August 31, 2015. It concluded that, in

light of Karkey’s previous production and the absence of any evidence of spoliation, “restoring

70 pre­April 2010 backup tapes is excessively burdensome.”

; ICSID Award ¶ 529. It

also required Karkey to submit a declaration confirming that the search for pre-April 2010

documents had been exhaustive, which Karkey then submitted. See Counter-Mem. ¶ 64.

2. Pakistan’s Second Request Based on New Evidence

Five months later, on December 11, 2015, Pakistan submitted its second request

for an order requiring Karkey to restore the Backup Tapes.

. Pakistan based its second

request on information it had received from “a Lebanese individual” who had shown Pakistan’s

counsel redacted copies of two alleged “Consultancy Agreements” that suggested the existence

of a “scheme” to secure Karkey’s rental service contract through illicit payments.

The

Lebanese individual refused to give copies of the Consultancy Agreements to Pakistan’s counsel

and demanded millions of dollars in exchange before turning over the redacted copies.

;

see also ICSID Award ¶ 528. Karkey denied the existence of the alleged “scheme” and argued

that the third application was “based wholly on hearsay, innuendo, and speculation.” Counter-

Mem. ¶ 66.

After considering the arguments from both parties, the Tribunal once again denied

Pakistan’s request. ICSID Award ¶ 530. 7 3. Pakistan’s Third Request

The arbitral hearing began in London on February 29, 2016. On March 1, the

second day, Pakistan again proffered evidence of corruption and asked the Tribunal to order

Karkey to restore and search the Backup Tapes.

. The Tribunal “dealt with the

application on Day 2 of the Evidentiary Hearing” and decided to admit some, but not all, of the

evidence proffered by Pakistan; the Tribunal declined to order production of the Backup Tapes.

. According to the Tribunal:

The basis for the Application was stated to be “new evidence of which Pakistan has only very recently been made aware through the unsolicited approach by a Lebanese individual”—in itself, a curious story. The documents allegedly available were themselves very suspicious. The alleged Consultancy Agreements . . . were mere copies and had names and dates redacted, making it impossible to verify their authenticity. It can also be noted from . . . the Attendance Notes that Pakistan’s counsel themselves had serious doubts about the authenticity of the alleged new evidence relating to the purported Scheme. Moreover, Pakistan’s explanation that it had continued its dialogue with [the informant] but that the latter withdrew his cooperation when he found out about Pakistan’s application to the Tribunal, together with the fact that Pakistan’s alleged informants were requesting a huge amount of money to cooperate, are such to destroy any semblance of credibility of the new “evidence”.

. Contrasting the evidence supporting Pakistan’s request for the Backup Tapes with the

powers and investigation of the National Accountability Bureau, the Tribunal emphasized that

“NAB itself concluded that there was no evidence of any wrongdoing by Karkey under

Pakistan’s anti-corruption law” and that “the Supreme Court has made no specific finding of

corruption in its Judgment regarding Karkey.”

. The Tribunal concluded that there

was no evidence of corruption in the record and that the evidence described by Pakistan was

“more probably aimed at extorting money from Pakistan or at derailing the arbitration

proceedings than at genuinely allowing corruption to be established.”

.

8 4. Arbitral Outcome

The Tribunal found and awarded judgment in Karkey’s favor in August 2017.

See

. Pakistan subsequently filed a request to annul the Award. See Appl., Ex. I,

Request for Annulment of Award [Dkt. 1-9].

B. The § 1782 Application

Pakistan submitted its Ex Parte Application for an Order Permitting

Discovery on Arnold & Porter on August 8, 2018. 3 See Appl. Pakistan’s document subpoena

(Subpoena) seeks documents from January 1, 2008, to April 30, 2010:

1. All documents related to the negotiation of agreement of any sort between Karkey and any entity owned or controlled by Pakistan; 2. All documents showing any payments of money or any item of value by Karkey to any of its employees or agents in Pakistan; 3. All documents showing any payments of money or any item of value by Karkey to any person or entity with the purpose of such payment reaching Karkey’s employees or agents in Pakistan; 4. All documents showing any payment of money or any item of value by Karkey to Raja Babar Ali Zulqarnain; 5. All documents showing any payment of money or any item of value by Karkey to any entity owned (directly, indirectly, or beneficially) by Raja Babar Ali Zulqarnain; 6. All documents showing any payment or money or any item of value by Karkey to any entity owned (directly, indirectly, or beneficially) by Bushra Ali Zulqarnain; 7. All documents showing the guidelines or procedures for keeping or maintaining the Backup Tapes; 8. All documents related to any response to the Request for Interrogatories . . . .

Appl., Ex. L, Subpoena to Produce Documents, Information, or Objects [Dkt. 1-12]. Pakistan’s

Interrogatories can be more readily summarized. They ask for the identities and contact

information for all custodians of the Backup Tapes; the identities and contact information for all

3 Pakistan is represented by U.S. counsel. Their clever references to Arnold & Porter as “the Target” are unprofessional and undermine their legal argument.

9 individuals or entities with access to the Backup Tapes from January 1, 2008 to the present; an

explanation of how the Backup Tapes are preserved and maintained “including details on any

encryption, method for tracking or confirming access to or review of the Backup Tapes, and the

methods for collecting, storing, and ensuring the integrity of the information contained in the

Backup Tapes”; and the terms under which access was terminated for any who did have access to

the Backup Tapes. Further, Pakistan wants to know Arnold & Porter’s retention policies for

client documents; whether Arnold & Porter represents any of the persons identified and the scope

of that representation; and an explanation of the relationship between Arnold & Porter and

certain identified persons. See generally Appl., Ex. M, Interrogs. Pursuant to Ex Parte Appl. for

an Order Permitting Discovery Pursuant to

(Interrogs.) [Dkt. 1-13].

On September 25, 2018, the Court denied the ex parte Application and required

Pakistan to serve it on Arnold & Porter. See 9/25/18 Order [Dkt. 4]. Pakistan served the

Application and the Court’s Order on Arnold & Porter on October 9, 2018. Arnold & Porter

objects to the Application. See Opp’n; Reply in Supp. of Pakistan’s Ex Parte Appl. for an Order

Permitting Discovery Pursuant to

(Reply) [Dkt. 14]. 4 Arnold & Porter

4 Pakistan filed a Motion for Leave to Amend Pleadings (Am. Mot.), Dkt. 15, and an Amended Application after Arnold & Porter filed its response. See Am. Ex Parte Appl. for an Order Permitting Discovery Pursuant to

(Am. Appl.) [Dkt 15-1]. The Amended Application indicates that Pakistan requested a revision of the Award based on new alleged evidence of corruption by Karkey and that the ICSID has provisionally stayed enforcement of the Award and reconstituted the Tribunal. See Am. Appl., Ex. R, Letter Regarding Reconstitution of Tribunal [Dkt. 15-21]. Pakistan suggests that the revision proceedings constitute a separate “foreign proceeding” for which the discovery it seeks is to be used. Am. Mot. ¶ 3. Otherwise, “Pakistan has refrained from making any other substantive changes to the 1782 Application” and the “discovery sought in the original 1782 Application (the ‘Backup Tapes’) is the same discovery sought in the amended 1782 Application.”

Arnold & Porter opposes the motion.

. The Court will deny the motion to file an Amended Application as unnecessary and duplicative. As discussed below, the Court concludes that the ICSID Tribunal constitutes a “foreign proceeding” but declines to exercise its discretion to order discovery which that very Tribunal refused.

10 submitted a declaration from one of its attorneys stating that it “does not now have, and at no

time before, during, or after the Arbitration has Arnold & Porter ever had, possession or custody

of the backup tapes.” Opp’n, Ex. 2, Decl. of Andrew Ware (Ware Decl.) [Dkt. 13-2] ¶ 4.

II. LEGAL STANDARD

Section 1782 authorizes the district court, in its discretion, to “order [a person

within its reach] to give his testimony or statement or to produce a document or other thing for

use in a proceeding in a foreign or international tribunal, including criminal investigations

conducted before formal accusation.”

(a).

In addressing a discovery application, the Court considers first whether it has the

authority to grant the request and then whether it should exercise its discretion to do so. Norex v.

Petroleum Ltd. v. Chubb Ins. Co. of Canada,

(D.D.C. 2005) (citing Intel

Corp. v. Advanced Micro Devices, Inc.,

(2004)). When determining its

authority to grant a discovery request under 1782, the Court considers “(1) whether the person

from whom discovery is sought resides or is found in the district where the action has been filed;

(2) whether the discovery sought is for use in a proceeding before a foreign or international

tribunal; and (3) whether the application is made by a foreign or international tribunal or ‘any

interested person.’”

(citing Schmitz v. Bernstein Liebhard & Lifshitz, LLP,

(2d. Cir. 2004)).

If the Court determines it has authority to grant the request, it must then determine

whether it should exercise that authority. See Intel,

(“[A] district court is not

required to grant a § 1782(a) discovery application simply because it has the authority to do

so.”). The Supreme Court has discussed “factors that bear consideration in ruling on a §1782(a)

request.” Id. at 264. Those include: (1) whether the person from whom discovery is sought is a

participant in the foreign proceeding; (2) the nature of the foreign tribunal and the character of 11 the proceedings; (3) whether the application conceals an attempt to circumvent foreign proof-

gathering restrictions or other policies; and (4) whether the discovery sought is unduly intrusive

or burdensome. Id. at 264-65. Review of these factors is framed by the “twin aims” of § 1782:

“providing efficient assistance to participants in international litigation and encouraging foreign

countries by example to provide similar assistance to our courts.” Id. at 252.

III. ANALYSIS

It is not disputed that Arnold & Porter resides in the District of Columbia. Nor is

it disputed that Pakistan is an “interested person” for the purposes of § 1782. However, Arnold

& Porter argues that neither the ICSID Tribunal nor the National Accountability Bureau’s

Investigation is a “foreign or international tribunal” within the meaning of § 1782, and that the

Court should exercise its discretion to deny Pakistan’s Application. The Court considers the

application of its authority to each of the proceedings separately.

A. ICSID Tribunal

1. Court’s Authority

Arnold & Porter argues that a “supra-national arbitral institution” such as the

ICSID is not the type of foreign or international tribunal contemplated by Congress when it

enacted § 1782. Specifically, Arnold & Porter cites decisions in the Second and Fifth Circuits

rejecting the use of § 1782 in support of private commercial arbitrations. See Nat’l Broad. Co. v.

Bear Stearns & Co.,

(2d. Cir. 1999) (“[T]here is no indication that Congress

intended [§ 1782] to reach private international tribunals.”); Republic of Kazakhstan v.

Biedermann Intern.,

(5th Cir. 1999). In each of those cases, private parties

arbitrating their disputes in the International Court of Arbitration of the International Chamber of

Commerce (ICC) were denied discovery. Arnold & Porter acknowledges, however, that district

courts have split on the issue since the Supreme Court appeared to open the door to such

12 discovery in its 2004 opinion in Intel. See In re Grupo Unidos Por El Canal, S.A., No. 14-mc-

00226,

, at *6 (D. Col. Apr. 17, 2015) (collecting cases).

The debate is interesting but inapplicable. District courts, including in this

district, have regularly found that arbitrations conducted pursuant to Bilateral Investment

Treaties, and specifically by the ICSID, qualify as international tribunals under the statute. See

In re Veiga,

(D.D.C 2010) (collecting cases). Arnold & Porter has

identified no split regarding ICSID cases. Unlike arbitrations before the ICC, arbitrations

pursuant to Bilateral Investment Treaties are not merely private arrangements; they are

sanctioned by their governments; governments participate in them, such as here. Indeed, this is a

distinction that both the Second and Fifth Circuits understood even before Intel. See Nat’l

Broad. Co. v. Bear Stearns & Co.,

, 190 (2d. Cir. 1999) (“It is clear that the 1964

legislation was intended to broaden . . . the reach of the surviving statute to intergovernmental

tribunals not involving the United States.”); Republic of Kazakhstan v. Biedermann Int’l,

(5th Cir. 1999) (“References in the United States Code to ‘arbitral tribunals’

almost uniformly concern an adjunct of a foreign government or international agency.”). This

Court agrees that “BIT Arbitration falls within the metes and bounds of § 1782(a).” In re Viega,

.

2. Discretionary Factors

a. Jurisdictional Reach of the Foreign Tribunal

“[W]hen the person from whom discovery is sought is a participant in the foreign

proceeding . . . the need for § 1782(a) aid generally is not as apparent as it ordinarily is when

evidence is sought from a nonparticipant in the matter arising abroad.” Intel,

.

This is because “nonparticipants in the foreign proceeding may be outside the foreign tribunal’s

13 jurisdictional reach; hence their evidence, available in the United States, may be unobtainable

absent § 1782(a) aid.” Id.

Pakistan points out that Arnold & Porter is not a participant in the Arbitration and

thus argues that its request for assistance should be granted. But this factor is not as helpful as

Pakistan contends. Although Arnold & Porter is not a party to the arbitration, its client, Karkey,

is. “A foreign tribunal has jurisdiction over those appearing before it, and can itself order them

to produce evidence.” Id. Ah, yes, Pakistan tried to do that and was denied, three times. This

factor does not weigh in favor of granting the Application.

b. Nature and Receptivity of the Foreign Tribunal

Arnold & Porter states that even if § 1782 applies to ICSID arbitrations, it should

not apply in the context of Annulment proceedings for which “[i]n principle, no new evidence

shall be admitted in this proceeding.” Appl., Ex. N, Annulment Procedural Order No. 1 [Dkt. 1-

14] ¶ 16.4. But the “party resisting discovery must point to ‘authoritative proof’ that the foreign

tribunal would reject the evidence sought.” In re Veiga,

-24 (quoting In re

Appl. of Caratube Int’l Oil Co.,

(D.D.C. 2010)). The same rule

cited by Arnold & Porter further states that “[s]hould either Party wish to introduce new

documents or other evidence, . . . that Party shall file a request to the Committee.” Appl., Ex. N,

Annulment Procedural Order No. 1 ¶ 16.4. Thus, ICSID has left open a window for Pakistan to

submit new evidence. This factor weighs in favor of granting the Application. 5

5 Pakistan also states in its Amended Application that the original Tribunal has since been reconvened to consider Pakistan’s request for revision of the Award. Am. Ex Parte Appl. for an Order Permitting Discovery Pursuant to

, Ex. R, Letter Regarding Reconstitution of Tribunal [Dkt. 15-21]. This information was provided to the Court after Arnold & Porter filed its response and does not alter the Court’s analysis but is not denied.

14 c. Circumvention of Foreign Proof-Gathering Restrictions and Policies

Three times now Pakistan has asked the Tribunal to authorize it to demand the

Backup Tapes from Karkey and three times now Pakistan’s request has been denied. The

Tribunal has repeatedly and thoroughly considered Pakistan’s request and concluded that

additional discovery was unwarranted. Pakistan argues that once it has the Backup Tapes the

only question before the Tribunal will be their admissibility, but that argument misses the point.

As discussed above, the Tribunal has authority to order discovery of the tapes and has repeatedly

refused to do so. Asking this Court for that same discovery from Karkey’s U.S. counsel, Arnold

& Porter, is clearly an end-run around the Tribunal’s evidentiary procedures, which apply to both

Karkey and Pakistan. Pakistan attempts to construe the instant request as unrelated to arbitral

discovery and “unique to the idiosyncratic procedural posture of the case,” Reply at 11, but its

description (a) still gives this Court no reason to disregard the Tribunal’s rulings, and (b) ignores

substantive findings by the Tribunal that “restoring 70 pre-April 2010 back-up tapes is

excessively burdensome in this case.” Counter-Mem. ¶ 63; see also In re Appl. of Caratube Int’l

Oil Co.,

(“Parties to an arbitration are free to set the procedural rules for

arbitrators to follow.” (internal quotes omitted)). This factor militates strongly against granting

the Application.

d. Scope of Discovery

Arnold & Porter avers that it does not have, and never has had, possession,

custody, or control of the Backup Tapes. Ware Decl. ¶ 4. “The burden of establishing control

over the documents sought is on the party seeking production.” Norex,

(quoting 7 Moore’s Federal Practice § 34.14(2)(b) (2004)); see Fed. R. Civ. P. 34(a)(l) (requiring

requested items to be “in responding party’s possession, custody, or control”). “Control is the

test with regard to the production of documents and is defined not only as possession, but as the

15 legal right to obtain the documents on demand.” Norex,

(marks omitted)

(quoting Searock v. Stripling,

(11th Cir. 1984)). Pakistan has produced no

evidence to rebut Mr. Ware’s declaration. Pakistan characterizes this as a mere technicality, but

Arnold & Porter cannot produce what it does not have. This too militates against granting the

Application.

B. National Accountability Bureau Investigation

1. Court’s Authority

Arnold & Porter agrees in the abstract that an investigation by the National

Accountability Bureau would constitute a foreign tribunal but argues vehemently that this

particular investigation is being “conducted in bad faith” and has “no legitimate basis.” Opp’n at

24. This distinction falls more in line with a discussion of the nature of the foreign tribunal and

use of the Court’s discretion and is addressed there.

2. Discretionary Factors

a. Jurisdictional Reach of the Foreign Tribunal

As with the ICSID arbitration, Pakistan argues that Arnold & Porter is not under

investigation by the National Accountability Bureau and, therefore, it is a third party from whom

Pakistan can properly obtain discovery under § 1782. But, again, Karkey is directly involved

and under investigation. Neither Party provides much detail of the scope of jurisdiction NAB

might have over Karkey, but it is undisputed that NAB and the judicial system of Pakistan have

some jurisdiction over Karkey’s assets since NAB issued a Deed and No Objection Certificate to

Karkey after examining its books and records and Pakistan still retains three of Karkey’s ships.

These facts counsel against granting the Application.

16 b. Nature and Receptivity of the Foreign Tribunal

Arnold & Porter describes the NAB investigation as “a politically motivated

harassment campaign against Karkey stemming from an arbitrary and illegitimate decision by

Pakistan’s Supreme Court” and states that “Pakistan’s Application appears to be intended more

to frustrate Karkey’s attempts to enforce the Award than to uncover evidence of corruption for

purposes of the endless NAB investigation.” Opp’n at 30-31. Arnold & Porter thus asks the

Court not to indulge such abuse of investigatory authority.

Professor Hans Smit, “a leading commentator and drafter of § 1782,” In re

Sargeant,

(S.D.N.Y. 2017), has written that “[a] refusal to grant

assistance under Section 1782 may also be based on the district court’s finding that, in some

way, the foreign proceedings are unfair or incompatible with domestic notions of propriety.”

Hans Smit, American Assistance to Litig. in Foreign and Int’l Tribunals, 25 Syracuse J. Int’l L.

& Com. 1, 15 (1998); see also United States v. Sealed 1, Letter of Request for Legal Assistance

from the Deputy Prosecutor General of the Russian Federation,

(9th

Cir. 2000) (“[T]he statute provides considerable discretion to district courts to decline to order

U.S. authorities to assist in situations where the foreign government has, for example,

insufficient basis to believe that evidence may be found here, or is simply seeking to harass

political opponents.”). Certainly it does not inure to Pakistan’s benefit that its Supreme Court

made no findings of corruption generally as to the Rental Power Projects or specifically as to

Karkey; that the National Accountability Bureau settled the matter with Karkey by Deed and

then issued a No Objection Certificate stating that it had “completed and closed its inquiry [in

respect of Karkey],” ICSID Award ¶ 136; and that the former NAB Chairman stated that the

Supreme Court’s actions created a “danger of unfair investigation being resorted to,” Id. ¶ 147.

None of these facts is addressed in Pakistan’s brief. 17 However, Professor Smit has also cautioned that “American courts should not

condemn foreign proceedings merely because they are different from those conducted in, or

unknown to, American courts.” Smit at 15. “It is not the business of our courts to assume the

responsibility for supervising the integrity of the judicial system of another sovereign nation.

Such an assumption would directly conflict with the principle of comity . . . .” Chesley v. Union

Carbide Corp.,

(2d Cir. 1991) (quoting Jhirad v. Ferrandina,

(2d Cir. 1976)). Caution seems particularly warranted when the dispute is an internal one,

between different institutions within a foreign government. It is clear that Pakistan’s Supreme

Court authorized the NAB investigation; that NAB “authorized” the instant Application, Appl. at

9; and that counsel for Pakistan filed said Application with this Court. Moreover, the

Application does not ask the Court to facilitate the extradition of a political opponent or the

seizure of assets; it asks merely for civil discovery, as to which Pakistan has offered to pay in

part. See id. at 14. Although muted by the facts surrounding this case, this factor weighs

somewhat in Pakistan’s favor.

c. Circumvention of Foreign Proof-Gathering Restrictions and Policies

Neither Party has provided details as to the National Accountability Bureau’s

proof-gathering abilities, policies, and restrictions. Without evidence of circumvention, this

factor weighs in favor of granting the Application.

d. Scope of Discovery

As discussed above, Pakistan cannot overcome the fact that Arnold & Porter

neither possesses nor controls the Backup Tapes. Although Pakistan states that it “cannot limit

itself to the Backup Tapes,” Appl. at 4 n.3, there is no doubt that Arnold & Porter has already

certified to the ICSID that Karkey has produced all responsive documents that could be located

and this Court will not require a duplication of that effort. There being no basis to enforce

18 Pakistan’s Subpoena to Produce Documents, Information, or Objects, Dkt. 1-12, it will be

denied.

A different analysis applies to Pakistan’s Interrogatories. They ask a number of

basic questions to the effect of “who has the tapes?” and “when did they have access to the

tapes?” and “how are the tapes stored?” See generally Interrogs. Even without possession or

control of the Backup Tapes, Arnold & Porter may nonetheless be able to answer these

Interrogatories, which do not require burdensome document recovery, review, and production.

The extent to which any such information may be protected by a privilege cannot be addressed

on this record but may be raised in due course. Therefore, the Court will order Arnold & Porter

to answer the Interrogatories at Dkt. 1-13 propounded by Pakistan.

IV. CONCLUSION

The Intel factors weigh against granting the Application as part of the ICSID

Arbitration. However, while it is not a one-sided issue, the Intel factors favor granting the

Application in part—limited to the Interrogatories at Dkt 1-13—due to the National

Accountability Bureau’s investigation. Pakistan’s Application for an Order Permitting

Discovery Pursuant to

, Dkt. 1, will therefore be granted in part and denied in

part. A memorializing Order accompanies this Memorandum Opinion.

Date: April 10, 2019 ROSEMARY M. COLLYER United States District Judge

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