From Contract to Courtroom: The Second Circuit Confirms that Forum-Selection Clauses May Tip the Intel Scales in § 1782 Discovery Disputes

1. Introduction

In Banoka S.à.r.l. v. Elliott Management Corp., 24-1352, the United States Court of Appeals for the Second Circuit addressed whether a district court abused its discretion when it denied wide-ranging discovery sought under 28 U.S.C. § 1782 for use in contemplated English litigation. The petitioners (“Banoka”)—French and Luxembourg investors—wanted internal documents from various U.S. affiliates of the Elliott hedge-fund group about a failed €55 million sale of a Paris hotel to Westmont, a real-estate developer backed by Elliott funds. After losing a similar bid for discovery against Westmont in Texas, Banoka tried again in New York, this time targeting Elliott entities and their American advisers. District Judge Gregory H. Woods granted a sliver of discovery from two offshore Elliott funds but denied discovery from the U.S. operating/advisory entities (EIM and EMC). Banoka appealed, claiming the judge misapplied the third and fourth discretionary factors articulated in Intel Corp. v. AMD, 542 U.S. 241 (2004).

The Second Circuit (Lynch, J., joined by Menashi and Lee, JJ.) affirmed. The Court’s most consequential holding is that, even absent evidence of a foreign “proof-gathering restriction,” a forum-selection clause favouring a foreign court “is nevertheless a factor that the district court may consider” under § 1782’s discretionary analysis. It also endorsed a practical, Rule 26-type burdensomeness inquiry that weighs corporate separateness, the location of electronic data, and the breadth of requested categories.

2. Summary of the Judgment

• Jurisdiction: Final, appealable order existed once Banoka dismissed its remaining subpoenas against the Elliott Funds.
• Third Intel Factor: A contractual clause selecting English courts for “any dispute arising out of or relating to” the exclusivity agreement could legitimately tilt against a § 1782 request—even if English law imposes no express bar on the discovery sought.
• Fourth Intel Factor: The district court reasonably found Banoka’s 14 document categories and deposition notices unduly broad, largely extraterritorial, and duplicative of materials held by Elliott’s London affiliate.
• Holding: No abuse of discretion; denial of Banoka’s petition (as to EMC/EIM) affirmed.

3. Analytical Commentary

3.1 Precedents Cited and Their Influence

• Intel Corp. v. AMD, 542 U.S. 241 (2004) – Source of the four discretionary factors guiding § 1782 decisions.
• Mees v. Buiter, 793 F.3d 291 (2d Cir. 2015) – Clarified that foreign discoverability is not a categorical bar but a permissible consideration; quoted for Rule 26 proportionality.
• Kiobel by Samkalden v. Cravath, 895 F.3d 238 (2d Cir. 2018) – Warned courts to consider incentives to relocate servers abroad; used to justify scrutiny of extraterritorial document demands.
• Fed. Republic of Nigeria v. VR Advisory, 27 F.4th 136 (2d Cir. 2022) – Cautioned against adding “extra-statutory barriers,” but affirmed broad discretionary room; cited to show court stayed within those bounds.
• In re del Valle Ruiz, 939 F.3d 520 (2d Cir. 2019) – Recognized that document location is relevant though not dispositive; echoed here.
• Venequip S.A. v. Caterpillar, 83 F.4th 1048 (7th Cir. 2023) – Sister-circuit precedent aligning with use of forum-selection clauses in § 1782 analysis; relied on for persuasive support.
• Klein v. Altara RK Investments, 2025 WL 560105 (2d Cir. 2025) – Recent summary order upholding similar reasoning; here converted into published authority.

3.2 The Court’s Legal Reasoning

1. No “Extra-Statutory” Barrier. The Court reiterated that district judges may weigh any factor consistent with § 1782’s purpose. Considering a forum-selection clause is not an additional prerequisite but a legitimate contextual data-point on forum-shopping and party expectations.
2. Link to Intel Factor Three. Although the clause did not reveal a formal ban on discovery, it manifested a “contractual preference” for adjudicating all disputes—including discovery matters—in England. That preference bears on whether the § 1782 request “conceals an attempt to circumvent” foreign procedures.
3. Proportionality under Factor Four. The requests covered virtually “all documents and communications” about the hotel sale over many months, many of which resided on servers managed by the London advisory entity (Elliott U.K.). Requiring U.S. entities to produce data whose “primary custodian” is abroad would (i) undercut corporate separateness, (ii) prompt strategic server-shifting, and (iii) duplicate discovery equally (or better) available in England.
4. Fact-Sensitive, Not Mechanical. Echoing Kiobel and Intel, the Court praised the district judge’s “highly contextual” approach—balancing sophistication of the parties, nature of the contemplated fraud claim, prior unsuccessful Texas litigation, and tender location of evidence.

3.3 Practical Impact

This decision crystallises a trend: forum-selection clauses are no longer peripheral in § 1782 disputes. Petitioners who contractually promised to litigate abroad face an uphill battle obtaining U.S. discovery absent clear, narrow, and demonstrably non-duplicative requests. Key implications include:

• In Transaction Documents: Parties can rely on a well-drafted clause to limit cross-border fishing expeditions. Drafters should consider adding explicit references to foreign disclosure regimes to fortify this effect.
• For Petitioners: Before filing, assess whether your discovery truly lies beyond the contractual forum’s reach and tailor requests accordingly. Blanket “all communications” subpoenas will likely fail.
• For Courts: The judgment encourages granular scrutiny of corporate structure, data location, and litigation history when applying Intel factors three and four.
• Across Circuits: The Second and Seventh Circuits now converge; expect other circuits to cite Banoka when evaluating how contractual allocation of forum rights interacts with U.S. discovery assistance.

4. Complex Concepts Simplified

• 28 U.S.C. § 1782: A U.S. statute allowing federal courts to assist foreign tribunals or litigants by ordering discovery (documents, depositions) from persons “found” in the district, for use abroad.
• Intel Factors: Four discretionary yardsticks: (1) party status in the foreign case; (2) foreign tribunal’s receptivity; (3) circumvention of foreign restrictions; (4) undue burden/intrusion.
• Forum-Selection Clause: A contract term where parties choose a specific court (or arbitral seat) to resolve disputes. Courts usually enforce such clauses absent fraud or over-reaching.
• Rule 26 Proportionality: U.S. discovery must be tailored so that “the burden or expense” does not outweigh the likely benefit, considering the importance of issues, access to evidence, and amount in controversy.
• Corporate Separateness: Legally distinct affiliates (e.g., Elliott U.S. vs. Elliott U.K.) are not automatically compelled to produce one another’s data; petitioners must show “control” or agency, not mere shared branding or IT systems.

5. Conclusion

Banoka v. Elliott Management marks a significant clarification in § 1782 jurisprudence. By elevating the contractual choice of forum into the discretionary calculus—even where no express foreign discovery bar exists—the Second Circuit constrains forum-shopping and encourages respect for negotiated dispute-resolution frameworks. Coupled with its robust endorsement of Rule 26 proportionality, the decision signals that expansive, location-spanning subpoenas aimed at U.S. affiliates will meet a skeptical eye, particularly when the real controversy or custodian lies overseas. Practitioners must therefore marry precision in drafting commercial contracts with discipline in shaping cross-border discovery strategies, lest they find their § 1782 petitions curtailed by the very clauses they once agreed to.