On January 28, 2026, in Kuwait Ports Authority v. Crowell & Moring, 2026 WL 248824 (D.C. Cir. Jan. 28, 2026), the U.S. Court of Appeals for the D.C. Circuit granted an emergency stay of discovery orders which had compelled a law firm to produce documents and testimony under 28 U.S.C. § 1782 for use in foreign litigation. Although issued in the stay context with substantive issues now on appeal, the decision provides useful guidance to parties and counsel navigating privilege disputes in Section 1782 actions and provides important considerations for general partners and others acting as “fiduciaries” more generally.

Background

Section 1782 allows an "interested party" to obtain an order from a U.S. court compelling discovery (including depositions) "for use in a proceeding in a foreign or international tribunal." However, Section 1782 explicitly prohibits compelling a person “to give his testimony or statement or to produce a document or other thing in violation of any legally applicable privilege.”

In Kuwait Ports Authority, the Section 1782 applicants, two limited partners of an investment fund, sought discovery from a law firm and two of its former partners concerning the firm's legal representation of the fund, its general partner, specified affiliates, and certain individual executives, for use in an upcoming trial in the Cayman Islands. The law firm intervened in the proceeding and filed a motion to quash, including on the basis that the materials sought were protected by attorney-client privilege and the work-product doctrine.

There was no real dispute that the materials contained legal advice and attorney work product. However, the Section 1782 applicants claimed that, because they had been limited partners, the fund and its general partner had acted as their fiduciaries in dealing with the law firm, and, therefore, under the “fiduciary-beneficiary” exception to privilege, they were entitled to receive copies of that legal advice. The law firm countered that the exception did not apply because an adversity of interest existed between the fund and general partner on the one hand, and the limited partners on the other.

A magistrate judge initially authorized the discovery and rejected the law firm’s arguments. A federal district judge subsequently overruled the law firm’s objections to the magistrate judge’s rulings and held the law firm in civil contempt given the law firm’s failure to produce responsive documents. The law firm then appealed to the D.C. Circuit, and filed an emergency motion for a stay which the D.C. Circuit granted.

In granting the stay, the D.C. Circuit found that the firm was likely to succeed on the merits of its claim that the documents were privileged and that compliance with the subpoenas would cause irreparable harm. As noted, there was no real dispute that the materials were privileged. According to the D.C. Circuit, however, once privilege was established, the burden of proof should have been placed on the party trying to pierce that privilege—here, the limited partners who were invoking the fiduciary exception. In the lower court proceedings, the magistrate judge improperly placed that burden on the law firm to show the fiduciary exception did not apply and, although the district judge apparently recognized this, the D.C. Circuit believed his reasoning nonetheless appeared to again improperly place the burden on the law firm to disprove that the fiduciary-beneficiary exception to the privilege applied.

The D.C. Circuit found that the other factors it considers in deciding a stay motion—the prejudice to the party opposing the stay and the public interest—were “close.” However, the law firm's "strong showing" of its likelihood of success on appeal was the "tie-breaker," and the court thus granted the stay.

Key Takeaways

1. Fiduciaries Should be Especially Mindful of The Fiduciary-Beneficiary Exception to Privilege in Connection with Section 1782 Discovery

In issuing its stay decision, the Court expressly noted that the D.C. Circuit had yet to recognize the fiduciary-beneficiary exception to the attorney-client privilege but acknowledged it had been adopted by the First, Fourth, Fifth, and Sixth Circuits. Under the exception, a fiduciary obtains legal advice as the "mere representative" of its beneficiaries, with those beneficiaries constituting the "real clients" of the attorney. A lawyer cannot then assert the attorney-client privilege against those "real client[]" beneficiaries.

The exception traces its history back to the English common law of trusts and is often referred to as the Garner doctrine in the modern-day corporation-shareholder litigation context, after Garner v. Wolfinbarger, 430 F.2d 1093 (5th Cir. 1970), an early case adopting the doctrine in that context.

In its January 28 decision, the D.C. Circuit expressly noted that the exception has been extended to limited partnerships, where “a general partner assumes the role of the fiduciary to the limited partners and the limited partnership.” The D.C. Circuit’s decision assumed, without adopting the doctrine, that “the fiduciary exception can override claims of attorney-client privilege.” The court also accepted as true for the stay motion that the fiduciary exception could overcome attorney work product protection. However, here the court expressed more skepticism, noting that even in some circuits where the exception is recognized, it has not entitled beneficiaries to obtain attorney work product. When the merits of the case are addressed, the D.C. Circuit may expressly hold whether it is adopting the exception and, if so, how far it reaches.

2. The Fiduciary Exception Turns on Mutuality of Interest at the Time of the Advice, An Issue as to Which the Party Seeking to Pierce Privilege Bears the Burden of Proof

The key issue discussed by the D.C. Circuit was whether the fiduciary-beneficiary exception to the attorney-client privilege applied here and which party bore the burden on that issue. The court recognized that "the existence of [a] mutuality of interest" among the fiduciary and beneficiaries “at the time the legal advice is rendered is critical." If that mutuality of interest ceases, the D.C. Circuit continued, then the fiduciary-beneficiary exception can no longer pierce invocations of privilege. The D.C. Circuit further explained that once the applicability of a privilege is initially established, the burden then shifts to a party seeking to overcome that privilege—in this case by showing the existence of a fiduciary relationship under the exception and mutuality of interest at the time the relevant advice was provided.

The court found that the limited partners seeking to overcome the privilege had provided only limited, "generalized" evidence" of this mutuality of interest, while the law firm had provided evidence of "materiality adversity" among certain of the limited partners, the general partner, and the fund, including "significantly adversarial proceedings" like foreign lawsuits, governmental investigations, asset freezes, and even foreign criminal proceedings extending back nearly a decade. In light of this evidence, the D.C. Circuit held that the law firm was likely to succeed on its appeal, and the Section 1782 applicants were not likely to overcome their burden in invoking the fiduciary-beneficiary exception given the divergence of interest throughout the period of representation.

Practical Implications

For corporations, partnerships, funds, and other fiduciaries involved in cross border disputes, the decision underscores some practical points.

First, the ruling highlights the importance of early privilege strategy in multinational disputes. Entities involved in complex partnership, fund, or joint venture structures should carefully consider how adversity among stakeholders may affect privilege analyses and should document the context in which counsel is retained, particularly when legal advice is sought in response to investigations, asset freezes, or threatened litigation. Successful invocations of privileges centered on attorney-client relationships or work product could turn on the structure of an engagement letter, as well as the clear and timely assertion of any adversity that develops between a fiduciary and its beneficiaries.

Second, efforts to use Section 1782 to obtain discovery from outside counsel continue. The ruling did not expressly discuss this trend, but the holding demonstrates that U.S. courts remain highly sensitive to—and are likely to closely scrutinize—Section 1782 subpoenas to outside counsel for client materials and advice, especially when U.S. privilege rules apply. Indeed, in granting the stay, the D.C. Circuit specifically noted that the subject discovery—sought via Section 1782—was to be used in a foreign proceeding beyond the court’s reach, where the court would lack the authority to enforce any protective order involving these highly sensitive discovery materials.

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