US Entities Have Strategies to Defeat Asset-Tracing Subpoenas

The Bottom Line

• US financial institutions have several ways to limit or defeat asset-tracing subpoenas brought under Section 1782.
• Recent doctrinal developments on post-judgment discovery have emerged in the Second Circuit.
• Subpoena targets can expose speculative “for use” theories, insist on jurisdictional limits, and invoke proportionality.

Potential targets of Section 1782 subpoenas related to asset tracing, such as banks and financial institutions, should understand the strengths and limitations of Section 1782 before they find themselves served with a subpoena. In recent years, US companies, banks, and individuals have increasingly become targets of asset‑tracing subpoenas brought under 28 USC Section 1782, which permits US courts to order discovery “for use in a proceeding in a foreign or international tribunal” upon application by an interested person, provided the respondent “resides or is found” in the district.

The statute can be a powerful tool for foreign litigants to identify US-based assets of foreign judgment debtors and trace funds through US financial institutions, but it has some key limits. Although Section 1782 can aid post‑judgment or post‑award enforcement, courts will shut down speculative global asset hunts and overbroad requests that are untethered to a concrete use abroad.

For subpoena targets based in the US, these rulings offer a practical roadmap to narrow or defeat demands for information commonly sought for purposes of post-judgment enforcement, such as bank records, wire data, and related communications. The sections below review the fundamentals of Section 1782, identify key takeaways from recent decisions within the US Court of Appeals for the Second Circuit, and outline practical strategies for US-based respondents when facing a Section 1782 subpoena.

Section 1782’s Requirements

Section 1782 provides that “[t]he district court of the district in which a person resides or is found may order him to give his testimony or statement or to produce a document or other thing for use in a proceeding in a foreign or international tribunal, including criminal investigations conducted before formal accusation.” Section 1782 can be used to compel the production of documents or testimony. In asset-tracing matters, it is more likely that documents rather than testimony will be sought.

The US Supreme Court’s 2004 decision in Intel Corp. v. Advanced Micro Devices, Inc. established a two-step framework for analyzing applications for discovery under Section 1782. First, the applicant must establish that the following three statutory requirements are satisfied: “(1) that the person from whom discovery is sought reside (or be found) in the district of the district court to which the application is made, (2) that the discovery be for use in a proceeding before a foreign tribunal, and (3) that the application be made by a foreign or international tribunal or ‘any interested person.’”

Second, even where the statutory factors are met, district courts retain broad discretion to grant, narrow, or deny discovery based on four non-exclusive factors, including whether the request circumvents foreign proof-gathering limits and whether it is unduly intrusive or burdensome. US-based targets facing a subpoena under Section 1782 should scrutinize the petitioner’s proffered evidence on the statutory factors, but the opportunity for persuasion of the court is more likely to be found within the discretionary factors.

Courts commonly grant Section 1782 petitions ex parte and resolve any disputes raised by the targets of the discovery once the subpoenas have been issued. Thus, the most substantive disputes in this area tend to arise on a motion to quash or modify a subpoena, after permission was already granted to serve the subpoenas requested by the petitioner. Both the subpoena respondent (such as a bank) and a party-in-interest (such as the defendant in the foreign proceeding) have standing to move to quash.

Second Circuit Lessons

Some key recent doctrinal developments concerning post-judgment discovery have emerged in the Second Circuit, where banks and other financial institutions commonly targeted for asset-tracing discovery tend to be located.

Notably, in Federal Republic of Nigeria v. VR Advisory Services, Ltd., the Second Circuit clarified that there is no categorical bar to using Section 1782 in aid of foreign post-judgment or post-award proceedings, opening the door to Section 1782 applications seeking post-judgment discovery for purposes of asset tracing. The court also clarified the statute’s explicit threshold requirements by holding that, in the Second Circuit, Section 1782 discovery must be for use in a foreign proceeding that is adjudicative in nature.

The Second Circuit declined to follow decisions in other circuits—such as the Eleventh Circuit’s decision in In re Clerici—that permitted discovery in aid of post-judgment execution regardless of whether the proceeding was adjudicative. Thus, a US-based target of a Section 1782 subpoena must look carefully at the law applicable within the relevant circuit, as it can vary in small but significant ways between jurisdictions.

In the wake of VR Advisory, district court judges within the Second Circuit have refined how Section 1782 operates in the post-judgment context. Two themes recur.

First, courts require a showing that the discovery will serve a specific, identifiable, and “adjudicative” foreign enforcement proceeding—not merely a generalized effort to locate assets for possible future use. Second, even where the statutory prerequisites are satisfied, courts frequently invoke Intel’s discretionary factors, with a particular emphasis on proportionality and burden, to narrow or deny sweeping requests directed at US financial institutions and other third parties.

Those principles are illustrated in a series of recent decisions from the US District Court for the Southern District of New York:

Ativos Especiais (2024). In In re Especiais, Judge Lewis Liman granted in part and vacated in part discovery sought in connection with several Brazilian matters. The applicants sought bank-level and CHIPS-system records from Morgan Stanley and the Clearing House Payments Co., asserting three potential foreign uses: a protesto (a public-notice procedure under Brazilian law), an execução (a judicial enforcement proceeding to compel contractual performance), and a contemplated incidente (a separate procedural mechanism to pierce the corporate veil).

The court analyzed the statutory “for use” requirement separately as to each proceeding. It accepted that a protesto involves a form of adjudication—namely, a judicial review of legitimate interest—but concluded that only limited discovery with a direct nexus to that process could qualify as “for use.” By contrast, the court held that discovery directed to broader post-judgment enforcement efforts or alter-ego theories wasn’t supported by a sufficient showing that those proceedings were pending or within reasonable contemplation.

Next, applying discretionary factors, the court quashed overbroad requests directed at corporate affiliates, found that the applicants hadn’t established a proper “for use” basis for execution-stage enforcement where no judgment or attachment proceedings were underway, and rejected the proposed incidente theory based on the absence of objective indicia supporting veil-piercing beyond allegations previously criticized by a Brazilian court.

Applying the Intel factors, the court emphasized proportionality, third-party burden, and the risk of circumventing Brazilian proof-gathering limitations. The court ultimately vacated the previously issued Morgan Stanley subpoena in full but declined to order the return or destruction of materials already produced by the Clearing House.

Palladian Partners (2025). In In re Palladian Partners LP, the court addressed a Section 1782 application arising from post-judgment enforcement efforts in the UK following a substantial judgment against the Republic of Argentina. As part of their enforcement efforts, the petitioners sought information related to Argentina’s potential ownership of assets generated by the 2025 launch of $LIBRA, a “memecoin” cryptocurrency token.

The court recognized that English post‑judgment enforcement tools—third‑party debt orders, debtor examinations, and freezing orders—were sufficiently adjudicative to justify the request. But the court exercised its discretion to deny the application on the basis that the requests linked to the cryptocurrency token were sweeping, minimally relevant, and appeared to be an impermissible fishing expedition aimed partly at potential proceedings “elsewhere.” The court also faulted petitioners for bypassing more central sources and for failing to show the US respondent had custody or control over the demanded materials.

Mammoet Salvage (2025). Also in late 2025, the court considered a post-award Section 1782 application in In re Salvage, which sought discovery in aid of enforcement of a final International Court of Arbitration award in the Netherlands and France. The petitioner sought correspondent-bank discovery focused on US-dollar transactions to support specific, identified enforcement proceedings abroad, including Dutch declaration proceedings addressing conflicting third-party statements and proceedings before a French enforcement judge.

The court first examined whether the respondent banks were “found” in the district, concluding that several were subject to jurisdiction based on their New York-based dollar-clearing operations, but rejecting jurisdiction over one bank where the allegations of New York contacts were speculative. Turning to the “for use” requirement, the court concluded that the requested information could be used in the Dutch and French proceedings identified by the petitioner, while rejecting arguments premised on undefined or hypothetical proceedings elsewhere.

Then, applying the Intel factors, the court found portions of the discovery requests overbroad and exercised its discretion to narrow them to materials closely connected to the specific Dutch and French enforcement proceedings.

Together, these decisions underscore that US-based discovery targets can bring successful challenges to limit or avoid Section 1782 subpoenas. Post-judgment discovery under Section 1782 in the Second Circuit is highly fact-specific and subject to pushback on each of the statutory requirements and discretionary factors.

Defense Strategies

The cases above illustrate that while Section 1782 remains a potent tool for global creditors when deployed carefully, respondents often have powerful defenses and tools that can meaningfully limit the burden, expense, and exposure of responding. Section 1782 subpoena respondents that face discovery related to asset-tracing investigations should keep the following strategies in mind.

Look for jurisdictional objections. Challenge whether the respondent “is found” in the district and insist any correspondent‑bank discovery be limited to US dollar‑denominated or US dollar‑intermediated transactions tied to identified counterparties and processed in New York (or another jurisdiction where the petition is brought). Even where an entity has a branch office and actively conducts operations in the district, courts may refuse discovery from banks lacking the necessary forum contacts.

Demand a concrete adjudicative hook. Challenge anything premised on “potential” enforcement without objective indicia that an enforcement proceeding is pending or imminent. Depending on the district, it may be possible to challenge the proceeding on the ground that it isn’t sufficiently “adjudicative.”

Lean on Intel factor four. Argue overbreadth, burden, and lack of proportionality under Rule 26 of the Federal Rules of Civil Procedure, focusing on mismatch to the asserted enforcement mechanism, marginal custodianship, and/or privacy of financial data and banking records. Palladian and Especiais show courts will quash or narrow broad asset‑tracing subpoenas.

Press alternative‑source and control arguments. If the materials are within the judgment debtor’s control or a core counterparty’s files, courts are receptive to requiring petitioners to seek discovery from those more central sources. A respondent’s sworn lack of possession, custody, or control can defeat intrusive demands.

Negotiate with subpoenaing counsel to narrow scope early. Negotiating with subpoenaing counsel to narrow the scope of the requests at the outset may help reduce exposure while avoiding the costs of litigating the scope of the discovery required.

Seek a protective order or other court-ordered limits on use. To the extent discovery is necessary, seek a protective order to shield confidential information and limit the use of the discovery to the contemplated foreign proceeding.

Consult experienced Section 1782 counsel before producing documents. If a bank produces before judicial review, courts may decline to order return or destruction when a petition is later quashed, depending on articulated privacy interests and the type of records produced. Subpoena targets should be careful not to waive potential arguments.

Outlook

Section 1782 remains available to support post‑judgment enforcement, but counsel and parties should be mindful that it isn’t a roving license for worldwide asset discovery. US targets can successfully resist or narrow subpoenas by exposing speculative “for use” theories, insisting on jurisdictional limits, and invoking proportionality to confine discovery to what a foreign adjudicator may actually consider. Narrow requests tied to ongoing enforcement proceedings fare best.

By understanding the nuances of Section 1782, particularly in the context of asset tracing, a party facing a discovery subpoena may be better equipped to negotiate a fair and cost-effective resolution.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law, Bloomberg Tax, and Bloomberg Government, or its owners.

Author Information

Katie Burghardt Kramer is a partner in DTO Law’s New York office, where she focuses on class action defense, commercial litigation, and arbitration matters, and regularly handles cross-border disputes.

Hannah Miller is an associate in DTO Law’s New York office who represents clients in complex business disputes, including class actions in state and federal courts and before arbitral tribunals nationwide.

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