Legal Language Blog

In the following post, we explore an important aspect of evidence taking: the venue for examination of a witness.

Mykalai Kontilai and his wife have been in litigation with the Securities Exchange Commissions (SEC) for years. The SEC alleged that Kontilai defrauded 140 investors of $23M.

In the most recent installment of this action, the district court addressed whether Kontilai could delay a deposition pending his application for asylum in Russia, and whether the deposition could then be taken in Russia instead of New York.[1]

The Burden of Showing Good Cause

The court began its opinion by observing that it

is well settled that to the extent a party seeks a protective order under Rule 26(c), that party “has the burden of showing that good cause exists for issuance of that order.” Thus, the burden to explain why he has good cause to decline to be deposed in New York rests with Kontilai.… Kontilai literally does not cite to a single case that explains the basis for his argument… Kontilai [also] never describes what the burden is that he would suffer if he had to fulfill his legal obligations in this case. Kontilai does submit the declaration of an alleged expert on Russian law who, in a disjointed declaration, asserts that Kontilai’s ability to obtain asylum in Russia will be prejudiced if he is ordered to be deposed in the United States. The expert gives no comprehensible explanation of why this is so, however.[2]

The court then stated that “Kontilai is legally obligated to respond to discovery requests. If Russia weighs his alleged fear of persecution in the United States differently because Kontilai complies with these important legal obligations, the Court finds that any such ‘burden’ is not undue.”

The court held that Kontilai had failed to carry his burden and he was to be deposed in New York.

Case Law Concerning Deposition Venues

While the opinion does not explicitly state Kontilai’s argument for being deposed in Russia, it appears to be based on assertion that Russia is where Kontilai is domiciled. Accordingly, the court reviewed the case law concerning the venue for a deposition:

While “the party noticing [a] deposition usually has the right to choose the location,” there is a rebuttable presumption that, absent special circumstances, the deposition of a defendant will be held where the defendant resides. When the parties cannot agree on a location, “courts retain substantial discretion to determine the site of a deposition.” “Factors guiding the Court’s discretion include the cost, convenience, and litigation efficiency of the designated location.” “The safety of the proposed venue may also be considered.”[3]

The court then addressed an interesting argument concerning the taking of evidence in cases where the US court has exclusive jurisdiction:

Here, the Commission did not have the option of bringing these federal securities claims in [Russia]. See In re Livent, Inc. Sec. Litig., 2002 WL 31366416, at *1 (S.D.N.Y. Oct. 21, 2002) (“Plaintiffs’ choice of forum was effectively constrained insofar as the Canadian judiciary was unavailable to them as a forum for these claims,” due to exclusive jurisdiction of U.S. federal courts over claims under the Securities Act and Exchange Act). Thus, we will not accord [the defendant] the benefit of the presumption and will instead turn to the factors that guide a court’s discretion in resolving disputes over the locations of depositions.

The court addressed the practicality of taking a deposition in Russia and concluded that it “is in fact not legally possible to conduct the deposition in Russia.”

And yet, Kontilai asserted — without citation — “that the Hague Convention could be used to arrange for a deposition in Russia.”

The SEC countered this argument by stating that

the United States has not accepted Russia’s accession to the Hague Convention insofar as it relates to taking evidence  The United States Department of State has specifically addressed this question, stating: The United States has not accepted the Russian Federation’s accession to the Hague Convention on the Taking of Evidence Abroad in Civil and Commercial Matters because the Russian Federation did not name a central authority at the time of its accession, and did not make any specific declarations or reservations regarding methods of obtaining evidence. Due to the Russian Federation’s unilateral suspension of judicial cooperation in civil and commercial matters, requests for evidence submitted via diplomatic channels in the form of letters rogatory generally are not executed by Russian authorities. The US Department of State and the US Embassy in Moscow will transmit such requests on behalf of US litigants. This barrier to discovery in Russia was described in Phoenix Process Equip. Co. v. Capital Equip. & Trading Corp., 2019 WL 1261352, at *10 (W.D. Ky. Mar. 19, 2019). Phoenix Process Equip. Co. noted that “[b]ecause [a]n accession is effective only between the acceding country and those contracting states that have accepted the accession, the United States and Russia are not treaty partners in the Hague Evidence Convention.” … In other words, the deposition cannot take place in Russia under the Hague Convention.[4]

In a similar vein, the court disposed of Kontilai’s request to be deposed in Russia via a video link.

Two Key Takeaways Concerning Depositions in Russia

Two comments are in order here:

1. Under the Hague Evidence Convention all countries must establish a Central Authority to receive requests for taking evidence and for forwarding said requests on to the appropriate court with jurisdiction over the witness. Whereas common law countries (e.g., the United States, the United Kingdom, India, Canada, and Australia) have also created mechanisms that allow a party to file an application for an evidence request’s execution directly with the appropriate court (bypassing the Central Authority and saving time), civil law countries (e.g. the countries of Western Europe and Russia) mandate that all evidence requests be routed through the Central Authority.

In the case of Russia, even today, there is no address for their Central Authority.[5] Said another way, there is no way to transmit an evidence request to the appropriate court in Russia. Having signed on to the Hague Evidence Convention, Russia presumably would not accept evidence requests transmitted as a Letter Rogatory. In short, it is not possible to depose someone in Russia.

2. Although the court did not mention Societe Nationale Industrielle Aerospatiale v. US Dist. Court for S. Dist. of Iowa,[6] it’s discussion of factors would appear to indicate that it was aware of this case. The Hague Evidence Convention, absent extraordinary circumstances (like the deponent is a US citizen or a US court can assert jurisdiction over an overseas witness),[7] is the mechanism for taking evidence from overseas third-party witnesses.

In this case, because the deponent is a party to the litigation, the court can take evidence from the deponent itself or use the Hague Evidence Convention (if it were allowed in Russia). The factors for making this decision are discussed elsewhere on this website.