Cross-border commercial disputes are common in today’s interconnected global economy and can involve witnesses, documents or assets located in more than one jurisdiction. The use of a so-called “1782 Action” can be a powerful tool for Brazilian litigants in circumstances where evidentiary discovery is needed in the U.S.
Under Section 1782 of the United States Code, “Interested persons” involved in a foreign legal proceeding can apply to a U.S. District Court to obtain evidence for use in such foreign legal proceeding. A 1782 Action is commenced by the filing of an application with a U.S. District Court seeking approval of an order to compel discovery from a person or entity in the district in which the Court sits. The type of evidence that may be compelled under Section 1782 includes both documentary and testimonial evidence.
Elements of a 1782 Application
In essence, an applicant under Section 1782 needs to show that:
(1) it is an “interested person” in a foreign proceeding. The case law defines an “interested person” broadly. In fact, an interested person does not even need to be a party to the foreign proceeding;
(2) the foreign proceeding should be before a “tribunal.” In this connection, the U.S. Supreme Court has explained that the proceeding does not need to be pending. Rather, the proceeding must simply be in “reasonable contemplation” at the time the discovery is sought; and
(3) the person from whom evidence is sought is in the district of the Court before which the application has been filed. The Courts have interpreted this requirement broadly. One Court explained that mere physical presence is enough to satisfy the requirement. With respect to corporate entities, Courts have found that conducting business or having offices in the judicial district is sufficient for the purposes of a 1782 action.
Factors Considered by the Reviewing District Court
In addition to the statutory elements set forth above, the following general factors are material to a District Court considering a 1782 application:
- whether the person from whom discovery is sought is a participant in the foreign proceeding;
- the nature of the foreign tribunal, the character of the proceeding and the receptivity of the foreign court or agency to offer on a reciprocal basis judicial assistance to U.S. federal courts. In the case of Brazil, it is generally receptive to U.S. federal-court judicial assistance;
- whether the discovery request seeks to circumvent applicable discovery limits in the foreign jurisdiction. Generally, 1782 applications that seek to circumvent discovery limitations imposed by a foreign tribunal are not favored. The applicant’s adversary, however, bears the burden of proving that the application is violative of the discovery limitations imposed by the foreign tribunal; and
- whether the discovery requests are “unduly intrusive or burdensome.” The discovery sought in a 1782 application must be tailored so that the requests do not impose an unreasonable burden on the party from whom discovery is requested.
Upon receipt of a 1782 application, the Court will either grant or deny the application or ask for further briefing from the applicant’s adversary. If the Court invites the adversary to oppose/challenge the 1782 application, the applicant will be required to submit a brief in further support of the application and possibly appear for oral argument.
Andrew L. Odell and Rodrigo Sadi
On September 6, 2019 the IRS announced new procedures (Relief Procedures for Certain Former Citizens) that will enable certain individuals who relinquished their US citizenship to come into compliance with their US tax and filing obligations. The procedures are directed at so-called “accidental Americans” (i.e., citizens of a country other than the United States who could be considered US citizens under relevant provisions of US nationality laws — for example, the individual born in the US to parents temporarily in the US for study or work purposes who returns to his or her country at a young age).
The new procedures are intended to apply only to individuals who
- have not filed US tax returns as US citizens or residents;
- owe a limited amount of back taxes to the United States (not in excess of US$25,000); and
- have net assets of less than US$2MM.
Only individuals whose past non-compliance was non-willful can take advantage of the new procedures.
Benefits to qualifying “accidental Americans” : The new procedures offer relief from taxes, penalties or interest.
The IRS intends to offer an on-line webinar in the near future to provide information in connection with making a submission under the Relief Procedures for Certain Former Citizens.
Non-U.S. investors should be aware of the tax benefits of investing in “Opportunity Zones.”
Opportunity Funds were created under the Tax Cuts and Job Acts of 2017 to incentivize investments in specified areas in the United States.
(Opportunity Funds are an investment vehicle organized as a corporation or a partnership for the purpose of investing in qualified opportunity zone property and provided that the Fund holds at least 90% of its assets in qualified opportunity zone property.) Continue reading Opportunity Zone Investing/Non-U.S. Investors – Defer U.S. Capital Gains Tax on USRPI
Use or sale of cannabis in the United States was generally prohibited until relatively recently. While U.S. federal law still prohibits the use or sale of cannabis, laws in at least 29 states and the District of Columbia permit the sale of cannabis for medical use only; in other states it is permitted for adult and medical purposes.
The industry has seen consistent growth – in 2016 alone, consumers spent $6.7 billion on legally purchased cannabis products and some estimate that by 2021, consumer spending on cannabis will reach $22.6 billion. Recent developments in Brazil seem to indicate that its policies, like those of several other countries, may be transitioning as well. Continue reading Cannabis Industry: Opportunities for Brazilian Investors
Changes to the EB-5 Immigrant Investor Classification Program have been proposed by the U.S. Department of Homeland Security. Approval of the Final Rules from the U.S. government agencies responsible for same is expected shortly.
The changes include a material increase in investment amounts to $1.35/$1.8 million and a grant of exclusive authority to USCIS to designate Targeted Employment Areas (TEAs) which will restrict investing to specified areas.
There will likely be a grace period (perhaps 30-days or 60-days) prior to the new EB-5 rule going into effect. Once the Final Rules are published, we anticipate some 2,000 to 4,000 investments during the grace period.
If you would like a copy of the proposed legislation or have any questions regarding the changes in the visa requirements or submitting an application, please contact Miriam O. Hyman, Andrew L. Odell or Rodrigo Sadi.