Federal District Court Opinions

06-82. United States District Court, D. New Jersey.
October 10, 2006


JOHN HUGHES, Magistrate Judge

This matter is before the Court upon the Motion of
Respondent Jack A. Barbanel (“Respondent”) to Vacate this
Court’s Orders of August 14, 2006 and August 18, 2006, to
Quash Subpoena, and to Award Fees and Costs pursuant to 28
U.S.C. § 1782, 28 U.S.C. § 1783, and the
Federal Rules of Civil Procedure. Petitioner Oxus Gold PLC
(“Petitioner”) opposes the Motion. Respondent’s Motion is
in response to two Orders issued by this Court. The first
was an ex parte Order on August 14, 2006, which granted
Petitioner’s Application to serve a subpoena pursuant to 28
U.S.C. § 1782 on Respondent within the District of
New Jersey. The second ex parte Order, on August 18, 2006,
found that the requirements of 28 U.S.C. § 1783 were
satisfied and authorized Petitioner to serve Respondent,
who was living in Moscow, Russia, with the subpoena abroad.
The subpoena seeks certain documents and testimony from
Respondent and would require him to travel from Moscow,
Russia to Trenton, New Jersey for a deposition. The Court
reviewed the written submissions of the parties and
conducted oral argument on October 5, 2006. For the reasons
that follow, Respondent’s Motions to Vacate this Court’s
Order of August 14, 2006, to Quash the Subpoena, and for
attorneys’ fees and costs are denied. Respondent’s Motion
to Vacate this Court’s Order of August 18, 2006, is
granted. Page 2


A. Overseas Proceedings

Petitioner Oxus is an international mining group based in
the United Kingdom. (Pet.’s Mem. at 6). In 1998,
Petitioner’s subsidiary, Norox Mining Company Ltd.
(“Norox”) and the State Enterprise Kyrgyzaltyn Joint Stock
Company (“KA”) jointly created the Talas Gold Mining
Company (“TGMC”) for the purpose of developing the Jerooy
gold deposit in the Kyrgyz Republic (“the Republic”).
(Kolleeny Decl. at §§ 3-4). Petitioner states
Norox is its wholly owned subsidiary and that TGMC, which
is controlled 66.7% by Norox and 33.3% by KA, is majority
owned by Petitioner. (Pet.’s Mem. at 6).

The Republic granted TGMC a license for the right to use
the subsoil at the Jerooy gold deposit. (Kolleeny Decl. at
§ 5). When TGMC failed to fulfill its obligations
under the license, the Kyrgyz State Agency on Geology and
Mineral Resources (“the Agency”) suspended TGMC’s license
in 2001 and then annulled it in 2002. Id. at § 6. In
2003, the Republic reinstated TGMC’s license in return for
TGMC’s agreement to develop the mine along an accelerated
time frame. Id. at § 7. When TGMC again failed to
meet its obligations under the license, the Agency canceled
the license on August 3, 2004 and formally approved this
decision by Resolution No. 597 on August 11, 2004. Id. at

In November 2005, Respondent, managing director of SIG
Overseas Limited (“SIG”), a corporate finance and private
equity consulting company based outside the United States,
contacted the Republic on behalf of a client who
potentially was interested in competing for the license to
develop the Jerooy mine. (Barbanel Decl. at
§§ 2, 4, 6). The Republic’s representatives
expressed to Respondent that they would not reconsider the
decision to annul Page 3 TGMC’s license and that they had
no obligation to reinstate the license. Id. at § 6.

Upon request by the Republic’s representatives, Respondent
met with Petitioner on December 1, 2005 regarding the
purchase of Norox’s interest in the Jerooy mine. Id. at
§§ 8-9. However, no agreement was reached
between the parties regarding the sale of Norox’s interest.
Id. at § 9. KA terminated the TGMC joint venture on
February 24, 2006. (Kolleeny Decl. at § 15).

TGMC initiated three court proceedings in Kyrgyzstan in
March 2006: (1) an action against the Agency challenging
its August 3, 2004 decision to terminate the License; (2)
an action against the Republic challenging the government
resolution that approved the Agency’s decision; and (3) an
action against the Republic challenging the validity of
Government Resolution No. 619, dated December 28, 2005,
which instructed KA to search for a new investor. (Adamyan
Decl. at §§ 3, 6, 8). Petitioner is not a
named party in any of these three proceedings. (Kolleeny
Decl. at § 16). Ultimately, the Republic’s and
Agency’s acts were upheld. (Adamyan Decl. at
§§ 3-7; Kolleeny Decl. at § 16). TGMC
is currently appealing the decision upholding Government
Resolution No. 619. (Adamyan Decl. at § 8).

Petitioner initiated arbitration proceedings against the
Republic pursuant to the United Nations Commission on
International Trade Law (“UNCITRAL”) rules. (Kolleeny Decl.
at §§ 19-20; Sheppard Decl. Ex. B.) Based on
the Republic’s actions concerning TGMC, Petitioner claims
that the Republic violated the Agreement for the Promotion
and Protection of Investment between the United Kingdom and
the Republic. Id. Further, the Prime Minister of the
Republic has advised TGMC of potential compensation claims
against TGMC for failing to fulfill its obligations under
the license. (Sheppard Decl. Ex. C). Page 4

On May 25, 2006, an Austrian corporation formed by SIG’s
client, entered into a joint venture with KA for development
of the Jerooy mine. (Resp.’s Br. at 6). On July 6, 2006,
the Primary First Trade Union Organization of TGMC then
filed a claim in Kyrgyz court seeking invalidation of the
resolution by the Republic approving the joint venture
agreement. (Adamyan Decl. at § 9; Sheppard Decl. Ex.
A). This case was dismissed based on a lack of standing.
(Adamyan Decl. at § 9).

2. Subpoena to Respondent

On August 11, 2006, Petitioner filed an ex parte
application pursuant to 28 U.S.C. § 1782 to take
discovery of Respondent and SIG. (Dkt. no. 06-82, entry no.
1). In its application, Petitioner claimed that the
requested discovery was for use in connection with the four
claims in the Kyrgyz courts, the international arbitration
proceeding, and the notice of compensation claim against
TGMC. (August 11, 2006 App. § 3). Petitioner further
stated in its application that it was a party in a related
arbitration proceeding against the Republic, a likely
defendant in the compensation claim, and a party to four
pending civil actions. Id. at § 4. Petitioner also
stated that Respondent and SIG have information relevant to
the proceedings discussed in the application. Id. at
§ 9.

On August 14, 2006, Petitioner’s ex parte Application was
granted by this Court pursuant to 28 U.S.C. § 1782
authorizing service of subpoenas for documents and
testimony from Respondent and SIG. (Dkt. entry no. 3). When
Petitioners could not serve Respondent in New Jersey, it
filed an ex parte Application on August 16, 2006, seeking
authorization under 28 U.S.C. § 1783 to serve
Respondent in Moscow, Russia. (Dkt. entry no. 4). In its
second application, Petitioner stated that Respondent
resides in Princeton, New Jersey and was expected Page 5
to be in Moscow, Russia “at least through the end of this
week.” (August 16, 2006 App. at §§ 1-2). This
Court granted Petitioner’s Application in an Order signed
August 17, 2006 which authorized service abroad under
Section 1783 and required that Petitioner tender $7,500 for
travel expenses. (Dkt. entry no. 5).

On August 17, 2006, Petitioner served Respondent in Moscow
by personal delivery. Respondent contends that “[s]uch
service was accomplished by a false representation to Mr.
Barbanel’s secretary that a deputy to the Minister of
Telecommunications and his assistant wished to meet with
him at a hotel in central Moscow, where Mr. Barbanel
consequently went, only to be met by two persons apparently
from the Moscow office of the law firm of Clifford Chance.”
(Barbanel Decl. at § 11). The subpoena was
accompanied by “a written undertaking that tendered a
commitment to reimburse [Respondent’s] expenses for
traveling to, and appearing for, his deposition in New
Jersey.” (Pet.’s Mem. at 10).

Respondent contends that the subpoena was authorized under
neither 28 U.S.C. § 1782 nor 28 U.S.C. § 1783.
Respondent further claims that (1) service was not proper,
(2) fees were not properly tendered, (3) the information
sought is overbroad and not relevant, and (4) Petitioner
violated Local Rule 27.1 by applying for the subpoena ex
parte. Petitioner claims that the subpoena was proper under
Sections 1782 and 1783. Petitioner argues that the subpoena
was properly served and fees were tendered. Petitioner
further argues that the discovery is relevant and
reasonably tailored.