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A true conflict between U.S. discovery rules and Israeli bank confidentiality laws led a U.S. court to decline to compel a non-party bank to produce protected documents. The documents sought by defendant pursuant to Fed. R. Civ. P. 45 were located in Israel, were unlikely to be helpful to defendant in responding to plaintiff's claims, and were covered by Israeli laws providing civil liability and criminal penalties if disclosed by the bank.

In an action for damages following suicide bombings and attacks in Israel, the West Bank, and Gaza, defendant sought orders compelling two New York banks and the Israeli parent of one of the banks to produce documents that defendant contended would show those banks processed transactions for the same charities that plaintiffs alleged defendant should have known were fronts for terrorist organizations. The New York subsidiary of the Israeli bank holding company substantially complied with the Rule 45 subpoena from defendant but objected to production of records in Israel of the holding company. The Israeli bank holding company claimed lack of jurisdiction to order it to produce records. The third non-party bank claimed it should not be required to produce records as a matter of comity in light of Israeli bank secrecy laws.

The court agreed that it did not have jurisdiction over the Israeli bank holding company and could not order production of its records in Israel. Also, the New York subsidiary and its Israeli holding company had separate computer systems and no access to each other's system. The New York subsidiary thus did not have control of the records in Israel and could not be ordered to produce them.

The court declined to order production by the third non-party bank of documents that were "protected" under Israeli law. Israeli bank confidentiality laws protected customer account and transactional information from disclosure to third parties by providing civil and criminal penalties, including imprisonment for up to five years. There thus was a true conflict between U.S. discovery rules and Israeli bank secrecy laws that required consideration of the doctrine of comity.

Under a five-factor international comity analysis, the court first noted that most of the documents were in Israel and were created and maintained by persons in Israel. Secondly, the importance of the documents in this litigation was questionable. Even if they indicated that the non-party bank should have known it was dealing with apparent terrorist front organizations just as defendant was alleged to have dealt with such organizations, the court already had indicated that plaintiff would have to show more than recklessness of defendant in following banking compliance procedures to support a damage claim against defendant. In any event, defendant had alternate sources for the documents it sought from the third party bank. Also, compliance with the production request would undermine important Israeli privacy and bank integrity interests and could impose undue hardship on the third party bank in the form of civil liability and criminal penalties. The final factor of the analysis – specificity of defendant's request – weighed in favor of production of the documents but all of the other factors weighed in favor of denying an order for production of the protected documents.