Fighting Extraterritorial Federal Subpoenas in International Cases

Fighting Extraterritorial Federal Subpoenas in International Cases

When a federal prosecutor issues a subpoena for records located overseas, the recipient often faces a dilemma. Complying with the subpoena may violate foreign law, but refusing to comply can lead to sanctions in the U.S. This article examines options for challenging extraterritorial subpoenas, key court rulings, and legislative efforts to curb their use.

The Extraterritorial Reach of Federal Subpoenas

Federal courts have power to subpoena documents and testimony relevant to proceedings before them, even if located abroad. This extraterritorial authority stems from a 1924 Supreme Court case, Blackmer v. United States, which upheld contempt sanctions against a U.S. citizen living in France who ignored a subpoena. However, the Court acknowledged limits, noting that subpoenas cannot require recipients to violate foreign law.

In the decades since, federal prosecutors have increasingly used extraterritorial subpoenas to obtain foreign evidence in criminal, tax, antitrust, and other probes. Recipients are often multinational companies with data stored on servers worldwide. While this tool can provide key evidence, critics argue it leads to conflicts with data privacy laws and undermines international comity.

Key Limits on Extraterritorial Subpoenas

Challenging a subpoena’s extraterritorial reach is difficult but not impossible. Key arguments include:

• Violation of foreign law: A U.S. subpoena should not require violating another country’s laws, for example data privacy statutes.
• Lack of personal jurisdiction: A subpoena recipient must have sufficient U.S. contacts for a court to exercise jurisdiction.
• Undue burden: Complying with the subpoena would pose an excessive burden, often due to high costs.
• Relevance: The requested materials lack relevance to the U.S. proceedings.

Courts balance these factors against the subpoena’s importance to the U.S. case. Even when foreign law prohibits disclosure, judges may still order compliance if U.S. interests outweigh countervailing concerns. However, the analysis is fact-specific, and recipients have secured favorable rulings, especially when acting in good faith.

Key Court Rulings

Several court decisions highlight the extraterritorial subpoena debate:

• United States v. First National City Bank (1965): This landmark ruling enforced a subpoena for bank records in Germany, despite German law prohibiting disclosure. The Court found U.S. interests prevailed, but said comity requires “careful inquiry” into foreign legal obstacles.
• Linde v. Arab Bank (2015): This terrorism financing case concerned a subpoena for records in Lebanon and Jordan. The court declined to enforce it, citing grave risks bank employees could face for violating foreign bank secrecy laws.
• Microsoft Corp. v. United States (2016): Microsoft challenged a warrant for emails stored on a server in Ireland. The Second Circuit quashed the warrant, rejecting the government’s expansive claim about a U.S. court’s authority over electronic data abroad.

These and other rulings demonstrate that while courts favor enforcement, they will quash subpoenas that disregard foreign sovereign interests or create undue burdens abroad.

Using Mutual Legal Assistance Treaties

One alternative to extraterritorial subpoenas is making requests through mutual legal assistance treaties (MLATs). The U.S. has MLATs with over 60 countries, allowing cooperative sharing of evidence for criminal investigations. However, the MLAT process can be slow and cumbersome. Prosecutors often prefer subpoenas as faster and giving them unilateral control.

In challenging subpoenas, recipients can argue prosecutors should use MLATs instead. This shows they are not stonewalling, but merely advocating the proper lawful process. However, courts do not always agree MLATs are required before issuing extraterritorial subpoenas.

Recent Legislative Limits

Congress has recently imposed modest limits on extraterritorial subpoenas:

• The Clarifying Lawful Overseas Use of Data Act (CLOUD Act) passed in 2018. This law allows the U.S. to enter bilateral agreements with other countries to facilitate cross-border access to electronic data for law enforcement purposes. However, these agreements do not restrict the existing ability of prosecutors to issue subpoenas directly to U.S. technology companies for overseas data.
• The European Union’s General Data Protection Regulation (GDPR) took effect in 2018. It restricts transfers of personal data outside the EU. Some experts argue that subpoenas for EU personal data now require scrutiny under GDPR, though U.S. courts have not uniformly adopted this view.

While neither the CLOUD Act nor GDPR substantially curtails extraterritorial subpoenas, they demonstrate increasing international concern about U.S. data access demands. Further legislative limits may emerge through ongoing diplomatic efforts.

Practical Tips for Challenging Subpoenas

For recipients, challenging extraterritorial subpoenas requires strategic decisions:

• Seek to narrow the subpoena’s scope to reduce foreign law conflicts and undue burdens.
• Clearly explain objections and proposed alternatives to the prosecutor.
• Be prepared to litigate, but also explore negotiated resolutions.
• Coordinate with foreign counterparts to demonstrate good faith efforts to comply lawfully.
• Develop protocols for data collection that isolate sensitive information.
• Argue for use of MLATs, even if unlikely to fully replace extraterritorial subpoenas. As the Department of Justice notes, MLATs allow cooperative sharing of evidence between countries for criminal investigations [2]. While slower than subpoenas, MLAT requests demonstrate a commitment to lawful international process [6]. Recipients can propose using MLATs first, then resorting to subpoenas for any remaining materials. This shows willingness to exhaust lawful options before complying with demands violating foreign law [4].

While extraterritorial subpoenas provide prosecutors a powerful investigative tool, their potential for conflict with foreign law generates controversy. Recipients navigating these demands have arguments to challenge overreach, but must act strategically. Careful attention to comity interests on both sides can help balance law enforcement needs against burdens on multinational companies. As data flows worldwide continue growing, further legislative solutions may emerge. But for now, meticulous case-by-case analysis prevails in this complex cross-border field.