Conducting Discovery in China: Which Law Governs—the Federal Rules of Civil Procedure or the Hague Evidence Convention?
Mandarin deposition interpreters and Cantonese deposition interpreters appear in on-site depositions and in Zoom depositions of Mandarin-speaking and Cantonese-speaking deponents daily throughout the U.S. But when the Chinese witnesses are based in China and need to provide their deposition testimony for use in the U.S. litigation, this question is likely to come up: Is Discovery in China Governed by the Federal Rules of Civil Procedure or by the Hague Evidence Convention?
The Federal Rules of Civil Procedure govern federal litigation in the United States. This includes the process of taking discovery from foreign entities and foreign nationals involved in federal litigation. Rule 43(a) requires that a witness’ testimony must be taken in open court absent good cause. Occasionally, a federal court may rely on the procedural rules implemented by the Hague Evidence Convention when those procedures are more conducive to the discovery process in foreign jurisdictions. But the Hague procedures are supplemental to the Federal Rules and are merely optional for federal courts. St. Jude Medical S.C., Inc. v. Janssen-Counotte, 104 F. Supp. 3d 1150 (D. Or. 2015).
Like the United States, the People’s Republic of China is a party to the Hague Evidence Convention. Under Articles 277 and 284 of the Civil Procedure Law of China, it is a crime for any individual within the borders of China to produce or obtain evidence in discovery for use in foreign courts without first obtaining permission from China’s Central Authority in accordance with the procedures governing the Hague Convention. This includes producing documents located in China, providing live oral testimony in China, see Yan v. Zhou, 2021 WL 4059478 (E.D.N.Y.), and offering remote video testimony while located in China, see Junjiang Ji v. Jling Inc., 2019 WL 1441130 (E.D.N.Y. 2019). This type of law prohibiting discovery is called a “blocking law.” Other countries, like France and India, have similar discovery blocking laws/ statutes. See Axtria, Inc. v. OKS Group, LLC, 2021 WL 6136600 (E.D. Pa.).
The conflict created by foreign blocking laws creates a legal dilemma for litigants, attorneys, and witnesses who participate in any discovery process within the borders of the “blocking” country. Anyone who participates in discovery in violation of a blocking law may face criminal sanctions. See Junjiang Ji v. Jling, Inc., 2019 WL 1441130 (E.D.N.Y. 2019) (court excluded plaintiff’s video deposition testimony taken in China because it found the proceeding in China to be illegal and exposed the defense to criminal sanctions). To avoid this conflict, attorneys seeking to depose witnesses who are located in China have sought to compel the witnesses to be deposed outside the borders of China, in places like the United States, or Hong Kong and Macau, both of which are special administrative regions (SAR) of greater China and are not subject to the restrictions of China’s Civil Procedure Law. Shenzen Synergy Digital Co., Ltd. V. Mingtel, Inc., 2021 WL 6072565 (E.D. Tex.).
However, parties and witnesses often do not wish to bear the expense and inconvenience of traveling to other locations outside of China just to be deposed. See, e.g., Wu v. Sushi Nomado of Manhattan, Inc., 2021 WL 7186735 S.D. N.Y. 2021) (witness had to “apply for a travel permit, wait for approval, receive a certificate, book his trip to Hong Kong, and then quarantine” because of coronavirus travel restrictions). Instead, the witnesses contend that they must be deposed in China, and only after the party requesting discovery obtains the permission of the Chinese government and follows the procedural rules of the Hague Evidence Convention.
As a result, many American courts have had to grapple with the issue of whether discovery should proceed in China subject to the rules of the Hague Evidence Convention, or somewhere outside of China pursuant to the Federal Rules of Civil Procedure. See, e.g., Wang v. Hull, 2020 WL 4734930 (W.D. Wash. 2020) (staying proceeding and granting defendant’s motion to compel plaintiff to appear for deposition where the parties can take testimony without fear of criminal consequences in China). The first step in this analysis is the burden of the party favoring the Hague Convention process to show that the applicable foreign law actually prohibits discovery.
American Courts Require Legal Translation of Chinese Blocking Laws
The first question for the court is whether the Hague Convention is necessary because discovery under the Federal Rules is prohibited under foreign law. Some of the applicable provisions in Chinese Civil Procedure are terms of art that must be translated from Simplified Chinese to English in order to be interpreted by the court. Glam and Glitz Nail Design, Inc. v. Igel Beauty, LLC, 2022 WL 17078947 (C.D. Cal.) (debating the meaning of “conducting investigation and collecting evidence” in the Chinese blocking statutes). In Philips Medical Systems (Cleveland), Inc. v. Buan, 2022 WL 602485 (N.D. Ill.), there were three different Chinese statutes that the defendants claimed prohibited them from complying with the U.S. discovery requests. The court held that to make a proper determination, it is “essential to interpret foreign law that has not been translated into English,” and that “objective, English-language descriptions of foreign law are preferable to the parties’ declarations when English-language translations or sources are available.” Only then, if the court determines that the foreign law blocks the discovery at issue, the court will move to the second step of the analysis and balance the relevant interests between the competing sovereigns.
American Courts Must Balance Comity Factors
Traditionally, when international conflicts arise involving written communications, such as requests for documents and interrogatories, courts consider principles of international comity, which include the following factors:
(1) the importance to the investigation or litigation of the documents or other information requested;
(2) the degree of specificity of the request;
(3) whether the information originated in the United States;
(4) the availability of alternative means of securing the information; and
(5) the extent to which noncompliance with the request would undermine important interests of the United States, or compliance with the request would undermine the important interests of the state where the information is located;
(6) the hardship of compliance on the party . . . from whom discovery is sought; and
(7) the good faith of the party resisting discovery.
See Société Nationale Industrielle Aérospatiale v. U.S. Dist. Ct., 482 U.S. 522, 107 S. Ct. 2542 (1987) (“Aérospatiale”) (offering the first five factors); Wu v. Sushi Nomado of Manhattan, Inc., 2021 WL 7186735 S.D. N.Y. 2021); In re Global Power Equip., 418 B.R. 833 (D. Del. 2009) (adding the last two factors); Laydon v. Mizuho Bank Ltd., 183 F. Supp. 3d 409, 419-20 (S.D. N.Y. 2016) (adding the last two factors in the Second Circuit); Sun Grp. V. C.R.R.C., 2019 WL 6134958 (applying the sixth factor in the Ninth Circuit). Several courts recently have applied these same principles to determine whether discovery or trial depositions should proceed in violation of foreign law. The party seeking to apply the Hague Convention process bears the burden of showing why that process is sufficient, and no single factor is dispositive. Axtria, Inc. v. OKS Group, LLC, 2021 WL 6136600 (E.D. Pa.).
Between 2021 and 2023, several courts have applied principles of comity to the conflict between the Federal Rules of Civil Procedure and the Hague Evidence Convention. The clear trend is that courts favor full discovery under the Federal Rules of Civil Procedure and the sovereignty of the United States over deference to foreign witnesses in domestic litigation, especially when, often, the only favorable factor for foreign entities is the location of the evidence in China. Laydon v. Mizuho Bank Ltd., 183 F. Supp. 3d 409 (S.D. N.Y. 2016).
Inventus Power v. Shenzhen Ace Battery, 339 F.R.D. 487 (N.D. Ill. 2021)
In Inventus Power v. Shenzhen Ace Battery, Inventus, a battery systems manufacturer, brought suit in Illinois against Shenzen, its Chinese competitor, for misappropriation of trade secrets. Inventus sought to compel the depositions under the Federal Rules of Civil Procedure, and Shenzen moved to conduct discovery pursuant to the Hague Evidence Convention. After balancing “the intrusiveness of the discovery requests, the sovereign interests involved, and the likelihood that resort to the Hague Convention would be effective,” the court held that because Shenzen had already produced documents in China in support of its own position in the litigation, it was not prejudiced by the possibility of Chinese sanctions and ordered the depositions to occur pursuant to the Federal Rules of Civil Procedure.
Shenzen Synergy Digital Co., Ltd. V. Mingtel, Inc., 2021 WL 6072565 (E.D. Tex.)
Shenzen Synergy sued Mingtel over contracts for the sale of computer tablets. Shenzen Synergy sought to have its witnesses testify remotely from Macau to avoid criminal ramifications in China. The court held that the prohibitions of Chinese law are not applicable in Macau and that remote video testimony is sufficient provided proper safeguards are in place. Appropriate safeguards include: (1) witness testimony must be tested by cross-examination; and (2) the trier of fact must be able to observe the demeanor of the witnesses.
Wu v. Sushi Nomado of Manhattan, Inc., 2021 WL 7186735 (S.D.N.Y.)
In Wu v. Sushi Nomado of Manhattan, Inc., the court balanced the comity factors and found that, despite the sixth factor (the hardship of compliance) weighing in favor of the witness, the hardship was not so substantial that it should determine the outcome, especially when the witness was provided the opportunity to be deposed outside of China but made no effort to do so. The court affirmatively ordered the defendant to make himself available for a remote deposition, in China or elsewhere, or be subject to sanctions for failing to do so.
Glam and Glitz Nail Design, Inc. v. Igel Beauty, LLC, 2022 WL 17078947 (C.D. Cal.)
Unlike the witness in Wu, the witnesses in Glam and Glitz Nail Design, Inc. volunteered to testify and were willing to be deposed notwithstanding the potential ramifications under Chinese law. Nevertheless, the court balanced the comity factors and issued a protective order opposing the discovery request under the Federal Rules of Civil Procedure. The court held that it could not require the defendant witness to bet on the Chinese authorities construing the law narrowly and not applying the blocking law to cooperating witnesses who testify remotely.
Nidec Motor Corporation v. Broad Ocean Motor, LLC., 2023 WL 346027 (E.D. Mo.)
Here, Nidec sought a court order compelling the Chinese defendants to comply with discovery. Although the request was limited to the production of documents, the court applied the comity factors and balanced them against using the Hague Convention because of the United States’ “overriding interest in the just, speedy, and inexpensive determination of litigation in its courts” and Congress’ interest in protecting intellectual property rights.
Monolithic Power Systems, Inc. v. Dong, 2023 WL 3504000 (N.D. Cal.)
In Monolithic Power Systems, Inc., Monolithic sues two of its former employees and their new company in China for breach of contract and misappropriation of confidential information. Monolithic sought to depose the defendants, who resided in China. The witnesses wanted remote depositions or in-person depositions in Macau or Hong Kong. The court found that live depositions were imperative and that, since any in-person testimony would require travel, the easiest forum for depositions was California. But because of the inconvenience to the defendants’ personal responsibilities and covid-19 travel and quarantine restrictions in Hong Kong, the appropriate location was Macau, or Hong Kong if travel restrictions were lifted.
Cabinets to Go, LLC v. Qingdao Haiyan Real Estate Group Co., Ltd., 2023 WL 3922640 M.D. Tenn.)
In Cabinets to Go, LLC (“CTG”), CTG sued Qingdao Haiyan for misrepresentation of the country of origin of certain goods it sold to CTG. In the case, CTG sought to compel the depositions of the defendants under the Federal Rules, but Qingdao Haiyan contested based on the inconvenience of being deposed in the United States. After balancing the comity interests, the court held that the likely benefit of the discovery to be obtained in the United States outweighed the potential burden or disadvantage to the defendants and granted CTG’s motion to depose the witnesses in the United States.
Motorola Solutions, Inc. v. Hytera Communications Corporation Ltd., 2023 WL 5956992 (N.D. Ill.)
In September 2023, in Motorola Solutions, Inc., in which Motorola sued Hytera for patent infringements related to several two-way radio technologies, the court ordered discovery to take place within a specific time period. Hytera requested to extend the time for discovery indefinitely because it had not received permission from the Chinese government to provide the relevant data. After contention over the English translation of Hytera’s application for permission under the Hague Evidence Convention, the court held that although the Chinese blocking law prohibited Hytera from providing discovery without authorization from the Chinese government, Hytera failed to demonstrate that the Hague Convention superseded the discovery required under the Federal Rules. The court denied Hytera’s request to postpone the discovery process to obtain permission from the Chinese government.
When Confronted with Foreign Blocking Laws that Prohibit Discovery, Comity Favors the Federal Rules of Civil Procedure over the Hague Evidence Convention absent Good Cause
Although many foreign sovereignties impose blocking laws that prohibit discovery produced in foreign (American) litigation, China is the sovereign that most commonly contests discovery conducted on its own soil. American courts recognize that when attorneys and witnesses conduct discovery inside the borders of China, they violate Chinese law and subject themselves to criminal sanctions. The Hague Convention stands as one possible solution to this dilemma. But it is not the only solution. When courts consider the relevant principles of comity and balance the sovereign interests at stake in how discovery is conducted, most courts since 2021 have held that the balance tips in favor of applying the Federal Rules of Civil Procedure in discovery absent good cause to defer discovery to the process of the Hague Convention.
Since the onset of Covid-19, travel restrictions and quarantine requirements have played a weighty role in balancing the court’s interest in receiving evidence efficiently and inexpensively, the inconvenience to witnesses, and the time and expense that accompanies the Hague Convention procedures. But since 2021, when covid-19 restrictions started to dissipate and travel became more accessible and less disruptive, courts have tended to view the inconvenience of the witness’ travel as much less substantial. Although the evidence being located in China is a consideration favoring the Hague Convention process, it is rarely viewed as sufficient cause to replace the Federal Rules of Civil Procedure.
Is there other sufficient cause not to allow for remote video-depositions that offer live translation from a foreign language into English when testimony of foreign nationals is necessary? Certainly, the dangers inherent in traveling into or out of foreign locations involved in military warfare present good cause not to force foreign nationals to travel for depositions. Consider that Israel and Ukraine—both countries currently at war—are both contracting parties to the Hague Evidence Convention. See Hague Conference on Private International Law Conférence de La Haye de droit international privé (HCCH), Convention of 18 March 1970 on the Taking of Evidence Abroad in Civil or Commercial Matters, Status Table. Although neither country enforces a blocking law against discovery similar to China’s, they could, especially as unrest in these countries continues to impact the political landscape.
Consider also that several courts have identified the translation of foreign documents, foreign testimony, and foreign blocking laws as relevant factors in determining the appropriate forum and procedure for conducting discovery in foreign countries. The availability of certified translators and deposition interpreters in any language will play a key role in an attorney’s ability to satisfy the two-part test for overcoming a foreign nation’s blocking law.
Reach out to All Language Alliance, Inc. to hire a court-certified Mandarin deposition interpreter, a qualified Cantonese deposition interpreter for an on-site deposition or for a Zoom deposition and to obtain certified Chinese to English and English to Chinese legal document translation services for the U.S. litigation.
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