Discovering discretion: applying Intel to [section] 1782 requests for discovery in arbitration.

• Author: Weekley, Jessica

Arbitration is an increasingly popular way for litigants to resolve commercial disputes, both in the United States and abroad. With the rise in the use of arbitration, issues related to international arbitration are likely to appear in American courts with increasing frequency. It is unclear whether American courts will assist in discovery proceedings for foreign tribunals, as they often do for other adjudicatory bodies, by compelling discovery from American entities beyond the foreign body's jurisdiction. The primary statute dealing with discovery for foreign courts is 28 U.S.C. [section] 1782. The Supreme Court recently clarified the meaning of this statute in Intel Corp. v. Advanced Micro Devices, Inc. (1) However, courts deciding recent cases have not consistently applied the Court's holdings to cases involving arbitral panels.

Under 28 U.S.C. [section] 1782, a federal court has authority to compel discovery for many types of proceedings conducted outside the United States:

The 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. (2) The statute does not define the term "foreign or international tribunal," which Congress inserted in place of the phrase "any court in a foreign country" when it revised the statute in 1964. (3) Before the Court's 2004 decision in Intel, two circuit courts held that "foreign or international tribunals" did not include private arbitral panels. (4) Since Intel, three courts have used [section] 1782 to compel discovery for use in arbitral panels, although these courts did not follow uniform reasoning. (5) Furthermore, the extent to which these cases followed the reasoning of Intel is not clear.

Intel gave the lower courts guidance for interpreting and applying [section] 1782, but did not explicitly define a "foreign or international tribunal." The Court emphasized that courts should be restrained by their own discretion rather than a narrow interpretation of the statute. To make sure that discretion is applied in a way that furthers [section] 1782's goal of international comity, the Intel Court provided factors to be considered in the lower courts' exercise of discretion. However, when a court considers a tribunal that is very different from the one at issue in Intel, considerations beyond the explicitly named Intel factors may be relevant. Consequently, a court considering a [section] 1782 request for an arbitral panel should consider the policies underlying arbitration generally in addition to the policies of the panel's jurisdiction.

Recent cases demonstrate that courts are uncertain about how to apply the Intel holding to requests for discovery in foreign or international arbitration. However, Intel does provide sufficient guidance; by following its reasoning and holdings more precisely, courts may arrive at well-reasoned and predictable outcomes. This Comment analyzes the relevant cases to determine how courts can best follow Intel in deciding [section] 1782 requests for private arbitral panels.

1. DECISIONS PRECEDING INTEL: [section] 1782(A) DOES NOT APPLY TO PRIVATE ARBITRAL PANELS

   The first case to address the application of [section] 1782 to discovery requests for arbitral panels was National Broadcasting Co. v. Bear Stearns & Co. ("NBC"). (6) The plaintiff, National Broadcasting Company, requested discovery in anticipation of an arbitration proceeding between private litigants before the International Chamber of Commerce, a private organization. (7) The Court of Appeals for the Second Circuit held that it could not grant the request because [section] 1782 did not apply to such private arbitral proceedings. (8)

   In coming to its conclusion, the NBC court first noted that arbitration in the United States is governed primarily by the Federal Arbitration Act (9) ("FAA"), which provides for more limited discovery than [section] 1782. (10) The court expressed concern that the discovery procedure in the FAA might be exclusive, meaning that [section] 1782 would conflict with the FAA to the extent that it broadened the discovery available in arbitral proceedings beyond what the FAA would otherwise permit. (11) While the court discussed this concern at length, it ultimately based its holding on the text of [section] 1782. (12)

   The court considered the plain meaning of the term "foreign or international tribunal" and found it to be ambiguous. (13) It then looked to the legislative history of the current text of [section] 1782. Specifically, the court referred to the report of the Commission on International Rules of Judicial Procedure (the "Commission") that Congress had relied on when it replaced the phrase "any court in a foreign country" with "foreign or international tribunal." (14) The report stated that the Commission chose the word "tribunal ... to make it clear that assistance is not confined to proceedings before conventional courts." (15) The report explicitly stated that the proposed changes to the statute's language would include investigating magistrates in foreign countries, but also stated more broadly:

   In view of the constant growth of administrative and quasi-judicial proceedings all over the world, the necessity for obtaining evidence in the United States may be as impelling in proceedings before a foreign administrative tribunal or quasi-judicial agency as in proceedings before a conventional foreign court. (16) Based on the report, the NBC court determined that the Commission had in mind only governmental entities. The court concluded that Congress had not considered private dispute resolution to be within the scope of [section] 1782 because there was no reference to such proceedings in the report. (17)

   As a final point, the court noted that litigants often choose arbitration because it typically involves limited discovery, making arbitration more efficient and less costly than traditional litigation. (18) The discovery allowed under [section] 1782 is broader than that permitted by the FAA as well as most foreign or international arbitration rules. The NBC court reasoned that to allow broad discovery in these proceedings would "create an entirely new category of disputes concerning the ... characterization of arbitral panels as domestic, foreign, or international." (19) The court held that this distinction was not grounded in policy and would not serve to advance the purpose of [section] 1782, which was passed as part of an effort to further "practices of judicial assistance and cooperation between the United States and foreign countries with a view to achieving improvements." (20)

   Shortly after the NBC case, the same question came before the Fifth Circuit in Kazakhstan v. Biedermann International ("Biedermann"). (21) That court followed NBC, holding that [section] 1782 does not include private international arbitration. (22) The Biedermann court determined that although [section] 1782 could be read to include arbitration, "not every conceivable fact-finding or adjudicative body is covered, even when the body operates under the imprimatur of a foreign government" (23)--thus suggesting that even government-sponsored arbitration may not be eligible for [section] 1782 requests. The Biedermann court also emphasized, as had the NBC court, that the broad discovery of [section] 1782 did not seem to accord with the general policies and goals behind arbitration and could easily undermine many of arbitration's perceived benefits. (24)

   After Biedermann, no court addressed this question de novo for several years. By the time the issue arose again, the Supreme Court had handed down an important decision interpreting the language of [section] 1782. As later cases show, it is unclear how important NBC and Biedermann remain in light of the Supreme Court's decision. (25)

2. THE SUPREME COURT'S INTEL HOLDINGS: SUBSTANTIAL GUIDANCE WITHOUT SPECIFICALLY ADDRESSING ARBITRAL PANELS

   The Supreme Court interpreted the language of [section] 1782 in Intel Corp. v. Advanced Micro Devices, Inc., but did not reach the question of arbitral panels. (26) The Court did, however, describe the policy grounds behind [section] 1782 in great detail and list a number of considerations for courts to use in considering any request for discovery under [section] 1782. (27)

   Plaintiff Advanced Micro Devices, Inc. ("AMD") filed an antitrust action against Intel Corp. with the Directorate-General for Competition of the Commission of the European Communities ("CEC"), an international arbitration panel. (28) AMD then made a request for discovery under [section] 1782, but the district court determined that [section] 1782 did not empower it to grant the request. (29) The Ninth Circuit reversed and the Supreme Court affirmed, providing guidance for the district court's subsequent ruling on the merits of the request. (30)

   Intel argued that the CEC was not a "foreign or international tribunal" for the purposes of [section] 1782 because the matter was still under investigation only and had not come before an adjudicative body. (31) However, the Court noted that the results of the CEC's investigation would be reviewable by two courts that are undoubtedly tribunals for the purposes of [section] 1782. (32) Because these higher courts' review was confined to the record before the CEC, [section] 1782 discovery would come before them only if ordered for use by the CEC. (33) The Court therefore held that the CEC is included in the scope of [section] 1782 "to the extent that it acts as a first-instance decisionmaker." (34) Additionally, the Court cited the Commission's 1964 report recommending the current language as evidence of legislative intent that the phrase "foreign or international tribunal" be interpreted broadly. (35) The Court parenthetically quoted a commentator...