I’ve seen a huge spike lately in the number of divorce attorneys calling about serving subpoenas on offshore banks. The routine story: Spouse A (usually the wife, but not always) has learned that Spouse B (usually the husband, but not always) has tucked a few thousand dollars into some offshore account, usually in one of several countries that are famous for stringent banking secrecy laws. Switzerland, the Cayman Islands, and the Channel Islands are those that come to mind, but protecting depositors’ privacy is fairly universal in the industrialized world. As such, the calls haven’t been limited to the famous banking havens.
Whatever the venue court might call the financial declarations in a dissolution, both spouses are required to disclose assets, liabilities, income, and expenses. Everybody must lay all of their cards on the table in a divorce action, and I haven’t seen a state yet that exempts offshore assets from the disclosure requirement. You tell what you have or you face the judge’s wrath. Pretty simple, right?
Nope. Amazingly, there are still a whole bunch of brilliant litigants out there who think they’re smarter than the judge– if I hide my cash in Zurich, there’s no way to prove I have it, because that’s where all the Nazis kept their cash and we still don’t know how much is squirreled away there!
Well, I hate to be the bearer of bad news, Spouse B. The Swiss have opened up their legal code to allow for disclosure in matters of fraud. They’ve taken great pains to return all that cash the Nazis squirreled away. You’re not going to be able to hide your fortune away from the world and then show up in Zurich like Jason Bourne to get cash out of his numbered account. We can find out what you’ve hidden. The only trick… is how.
So back to the heart of the call from Spouse A’s lawyer. How do you serve a subpoena on an offshore bank?
Short answer: you don’t. At least, not if you actually want it to work. Yes, theoretically, you can serve a subpoena under the Hague Service Convention– in some places.
In other places, various authorities may view your service attempt as a usurpation of judicial authority and reject your request. More to the point, even if the thing could be served, it has no teeth, so good luck enforcing it.
Serve a U.S. subpoena on a Cayman bank, and the bank will rightly ignore your demand. Likewise a Swiss bank or a Jersey bank or Singaporean bank. They’re all going to giggle at you just a bit while sticking your subpoena quietly in a drawer. Why? Well, a subpoena loses its coercive effect when it leaves its own jurisdiction– and it only gets it back if (1) a statute automatically confers it– see the Uniform Interstate Depositions and Discovery Act (UIDDA)– or (2) if a court in the foreign* state blesses it with that court’s authority– as in a garden variety domestication action.
But there is no treaty comparable to UIDDA. And an offshore foreign** court is just not going to rubber-stamp a New York subpoena like a Missouri court would (Full Faith & Credit is not a thing overseas).
The alternative? A Letter of Request pursuant to the Hague Evidence Convention. That comes with some Cardinal Rules, which I outlined more thoroughly in late-2016:
- Take the words “any and all”, and eliminate them from your vocabulary. Seriously. They are the hallmark of good old ‘Murican discovery, and foreign courts hate that.
- Articulate precisely how that evidence is going to be used at trial. Not that you think it may lead to other evidence or that you suspect that it might be relevant. You have to say you need it to impeach a witness’ expected testimony or that it is a critical component of your trial theory…
- Hire local counsel in the foreign jurisdiction. They’ll help us/you draft the request. And they’ll appear for you in the foreign court fielding the request.
Pertinent to the questions here is a variant of #2. Not only can you indicate that the information sought will be used to impeach Spouse B’s Asset & Liability Statement, but also indicate that the U.S. court needs to adjudicate an allegation of fraud. Courts around the world take a very dim view of lying to other courts– whether by commission or omission. A properly formatted Hague Evidence Request that includes a fraud allegation… better odds of success.
So don’t just serve that thing. Even just starting the proper procedure may prompt the opposing spouse to come clean.
* Foreign in the “across State Line Road” sense. Not in the “you need a passport to go there” sense.
** Foreign in the “you need a passport to go there” sense.