Eleventh Circuit holds private commercial arbitration panel is a 'tribunal' for purposes of 28 U.S.C. 1782.

Author:Sheehan, Charles E.
 
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Consorcio Ecuatoriano de Telecomunicaciones S.A. v. JAS Forwarding (USA), Inc., 685 F.3d 987 (11th Cir. 2012).

In a global economy, the ability to obtain evidence located in foreign jurisdictions is necessary for international arbitration to be effective. (1) Yet, despite worldwide efforts to address this persistent concern, United States courts have continued to disagree on whether to grant judicial assistance to certain foreign governmental agencies. (2) In Consorcio Ecuatoriano de Telecomunicaciones S.A. v. JAS Forwarding (USA), Inc., (3) the United States Court of Appeals for the Eleventh Circuit took a prolific step toward authorizing broad discovery assistance when it interpreted "tribunal" according to 28 U.S.C. [section] 1782. (4) The Court rejected the defendant's challenge that the requested evidence was not being used in a proceeding, concluding that a private commercial arbitration panel was a foreign tribunal within the meaning of the statute. (5)

Consorcio Ecuatoriano de Telecomunicaciones S.A. (CONECEL) and Jet Air Service Ecuador S.A. (JASE) had a contractual relationship for over a decade. (6) However, in 2008, the relationship between the two parties deteriorated after CONECEL conducted an internal audit and determined that JASE had been improperly overbilling by millions of dollars. (7) JASE denied the allegations and claimed CONECEL failed to pay multiple invoices in 2008. (8) CONECEL intends to file a civil action against its former employees for collusion in the civil-mercantile court of competent jurisdiction in Quito, Ecuador. (9) Because, under Ecuadorian law, a party must present its evidence up front along with the pleadings, CONECEL sought assistance under 28 U.S.C. [section] 1782. (10)

On July 14, 2010, CONECEL filed an ex parte application for judicial assistance in the District Court for the Southern District of Florida in order to obtain evidence pursuant to 28 U.S.C. [section] 1782. (11) On July 20, 2010, the district court granted the ex parte application and authorized CONECEL to issue and serve a subpoena on JAS USA seeking the discovery outlined in CONECEL's application. (12) JASE moved to intervene to quash the subpoena and to vacate the order granting the application. (13) On petition for review, the Eleventh Circuit affirmed the district court's decision to grant the section 1782 discovery application, holding that the arbitration tribunal before which JASE and CONECEL's dispute is now pending is a foreign tribunal for purposes of the statute. (14)

The growth of international business activities has increased the frequency of transnational conflicts. (15) Motivated to avoid the costs and uncertainty of litigation among the world's diverse judicial systems, parties have frequently utilized arbitration as an alternative for resolving disputes. (16) Nevertheless, for international arbitration to continue as a viable option, judicial assistance in obtaining evidence is needed worldwide. (17)

Since the mid-nineteenth century, Congress has authorized the federal courts to grant discovery requests in connection with foreign proceedings. (18) Congress enacted its first statute in 1885 to permit federal courts to assist foreign bodies in acquiring evidence within the United States. (19) Recognizing the Act of 1855's shortcomings, Congress passed new legislation in 1863.20 In 1948, Congress modified the Act of 1863, codifying the amended version as 28 U.S.C. [section] 1782.21 Accepting the reality that the even more changes were necessary to deal with evolving needs of the international community, Congress created the Commission on International Rules of Judicial Procedure in 1958.22 Today, the Committee's findings from 1964 remain in effect and reflect the current version of 28 U.S.C. [section] 1782. (23)

The plain reading of 28 U.S.C. [section] 1782 authorizes the federal courts to cover proceedings "in a foreign or international tribunal." (24) While the amended version's intention was to expand the availability and scope of judicial assistance in the United States, the statute soon fell victim to various conflicting interpretations in the circuit courts. (25) In 2004, in Intel Corporation v. Advanced Micro Devices, Inc., (26) the Supreme Court interpreted 28 U.S.C. [section] 1782 for the first time. (27) While the Supreme Court did not specifically address whether the statute covered a private arbitration tribunal, the Court did provide some guidance as to the meaning of "tribunal" under 28 U.S.C. [section] 1782. (28) Yet, even post-Intel, courts have continued to reach differing conclusions as to whether 28 U.S.C. [section] 1782 is available to parties participating in private international arbitrations. (29)

In Consorcio Ecuatoriano de Telecomunicaciones S.A. v. JAS Forwarding (USA), Inc., the Eleventh Circuit determined that the pending arbitration between JASE and CONECEL satisfied the four functional requirements of 28 U.S.C. [section] 1782.30 The Court held that the arbitral tribunal is a foreign tribunal for purposes of the statute. (31) The court reiterated that determining whether a foreign arbitration falls within the scope of 28 U.S.C. [section] 1782 is guided in substantial measure by the Supreme Court's Intel decision. (32) The court echoed that the legislative change made by Congress in 1964 was introduced to ensure broader U.S. judicial assistance. (33) Accordingly, the Eleventh Circuit agreed that a private commercial arbitration panel falls within the term "tribunal" under 28 U.S.C. [section] 1782. (34)

Recognizing that the Supreme Court in Intel was not tasked with specifically deciding whether a private arbitral tribunal falls under the statute, the court examined the characteristics of the arbitral body at issue. (35) Furthermore, the court addressed other underlying concerns and determined that courts could modify discovery requests using discretionary factors to ensure that parties still obtained the benefits of private arbitration. (36) Moreover, the Court recognized that a district court is not required to grant a section 1782(a) discovery application simply because it has the authority to do so. (37) Convinced that the above issues were appropriately addressed, the Court found that the district court did not abuse its discretion in granting JASE's discovery requests. (38)

The Eleventh Circuit appropriately analyzed the four functional requirements of 28 U.S.C. [section] 1782 prescribed by Congress to the pending arbitration in accordance with the Supreme Court's Intel decision. (39) Determining that a private commercial arbitration panel is a foreign tribunal is entirely consistent with the language chosen by Congress within section 1782(a). (40) By interpreting 28 U.S.C. [section] 1782 in such a fashion, the Eleventh Circuit has applied a broader definition, thus expanding the opportunity for parties to receive judicial assistance in transnational conflicts. (41)

While the Eleventh Circuit's decision is preferable, section 1782(a) should not be without its limits. (42) Courts should be hesitant to grant judicial assistance to parties looking to circumvent a tribunal's evidence-gathering processes. (43) Therefore, a court's discretionary power to grant a discovery request should not be taken lightly. (44) However, this approach requires a court to make findings on a case-by-case basis, ultimately burdening the court docket with discovery applications that may have little to no merit. (45)

The Eleventh Circuit's holding in Consorcio Ecuatoriano de Telecomunicaciones S.A. v. JAS Forwarding (USA), Inc. creates a circuit split on whether private arbitral tribunals fall within section 1782's scope. (46) The Court's approach...

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