Navigating U.S. Discovery in Foreign Commercial Arbitration Proceedings

• Author: Brian A. Zemil
• Pages: 20-20

arties in i nternational arbitration proceedi ngs are

increasingly t urning to American cour ts for sub-

poenas to import fac ts from the United States. As

28 U.S.C. § 1782 authorize s federal courts to order

testimony or produce doc uments only in aid of pro-

ceedings befor e a “foreign or internation al tribunal,” courts

disagree about the appl icability of section 1782 beyond pro-

ceedings in or u nder the auspices of foreign courts. Unti l the

Supreme Court set tles the issue, parties to i nternational arbi-

trations should ex pect jurisdiction- by-jurisdic tion disputes

about their ability to employ subpo enas to facilitate the reso-

lution of their claim s.

In Intel Co rp. v. Advanced Micro Dev ices, Inc., 542 U.S.

241 (2004), the Supreme Court re cognized the broad discre-

tion of federal court s to allow international litigants to con-

duct discovery in t he United States, subject to relevancy a nd

proportional ity considerations. Althoug h the case did not

directly res olve the scope of sect ion 1782, the Court applied

the statute to a proce eding before a nonjudicial entity sug-

gesting that “foreig n tribunal[s]” include conventional arbi-

tral courts , thereby approving section 1782 discovery in a

nonjudicial proceed ing.

Before the Intel decision , the Second and Fifth Circu its

concluded that privately constit uted tribunals overseeing

international com mercial arbitrations lie outside sect ion

1782. In Nationa l Broadcasting Co. v. Bea r Stearns & Co.

(NBC), 165 F.3d 184, 190 (2d Cir. 1999), the Second Circu it

ruled the phras e “foreign or international tribunal ,” as used

in section 1782, was ambig uous and interpreted the legisla-

tive history of sec tion 1782 as evidencing a congre ssional

intent “to cover governmental or i ntergovernmental a rbitral

tribunals and c onventional court s and other state-sponsored

adjudicatory bodies .” The Second Circuit re asoned that

allowing sec tion 1782 discovery in inter national arbitration

would conict “w ith the efciency and cost-ef fectiveness

of arbitration.” Id. at 190 –91. The Fifth Circuit sim ilarly

ruled that sec tion 1782 did not apply to private commer-

cial arbitration in R epublic of Kazakhsta n v. Biederm ann

International, 168 F.3d 880, 883 (5th Cir. 1999), noting:

“Empowering arbitrators , or worse, the parties, in private

international d isputes to seek ancillary dis covery through

the federal cour ts does not benet the arbitration process .

Arbitration is intende d as a speedy, economical, and effective

means of dispute resolution .” See also El Paso Corp. v. La

Comision Ejecutiva Hidroelectrica Del Rio Lempa, 341 F.

App’x. 31, 33–34 (5th Cir. 2009) (reaching s ame conclusion,

after Intel).

The Sixth a nd Fourth Circuits recently reac hed a contrary

conclusion. In Abdul Lat if Jameel Transp. Co. Ltd. v. FedEx

Corp., 939 F.3d 710, 730 –31 (6th Cir. 2019), the Sixth

Circuit rule d that section 1782 permits discovery for use

in private commercial a rbitrations, concluding: “American

lawyers and judges have long under stood, and still use, the

word ‘tribunal’ to encompass pr ivately contracted-for arbitral

bodies with t he power to bind the contracting partie s.” The

Sixth Circ uit also relied on the fact that Intel approve d sec-

tion 1782 discovery in a nonjudicial pro ceeding to support

a broad denition of “tribu nal.” Dismissing t he efciency

arguments of t he Second and Fifth Circuits , the Sixth Circuit

characteriz ed the statutory requirements as a ba re minimum

threshold and noted th e “substantial di scretion” of the dis-

trict cour ts “to shape discovery under §1782(a)” if discovery

requests pose a th reat of undue burden. In Servotro nics, Inc.

v. Boeing Co., 954 F.3d 209, 216 (4th Cir. 2020), the Fourth

Circuit simi larly held that parties to a private arbitral pro -

ceeding in t he United Kingdom could obtain discover y via

section 1782. See al so, e.g., HRC-Hainan H olding Co., LLC

v. Hu, No. 19-MC -80277, 2020 WL 906719, at *4 (N.D.

Cal. Feb. 25, 2020) (adopting reason ing and conclusion of

Abdul Latif Ja meel Transp. Co. Lt d.), appeal docketed, No.

20-15371 (9th Cir.).

The fractu re among the federal courts has reach ed inside

the Second Circ uit. Aspart of In re Children’s Inves tment

Fund Fou ndation (UK), 363 F. Supp. 3d 361, 368–69

(S.D.N.Y. Jan. 30, 2019), one Southern Distr ict of New York

jurist decline d to follow NBC. As part of a decision now pend-

ing before the Sec ond Circuit, a different jurist felt b ound by

NBC. In re Applic ation of Hanwei Guo, 2019 WL 917076

(S.D.N.Y. Feb. 25, 2019), appeal docketed, No. 19-781 (2d

Cir.) ; see also In re Applicati on of Servotronics, No. 1:18-

cv-07187 (N.D. Ill. A pr. 2019), Dkt. ECF No. 44 (gra nting

section 1782 application), on appeal , Servotronics, Inc . v.

Rolls-Royce PLC (B oeing as intervenors), No. 19-1847 (7th

Cir.).

Unless and unti l the Supreme Court resolves the deepen ing

split among the federal c ourts, applic ants seeking d iscovery

for use in internat ional proceedings should carefu lly consider

the governing case l aw of the court from wh ich they seek

relief to ensure that t he “foreign tribunal” requirement does

not pose a serious imped iment to discovery and the search

for the truth.

Navigating U.S. Discovery in Foreign

Commercial Arbitration Proceedings

By Brian A. Zemil , Litigation News A ssociate Editor

20 | SECTION OF LITIGATIO N

Published in Litigation News Volume 46, Number 2, Wint er 2021. © 2021 by the Americ an Bar Association. Re produced with per mission. All rights res erved. This infor mation or any portio n thereof may not be c opied or disseminated in any

form or by any means or sto red in an electronic da tabase or retrieval sy stem without the ex press writt en consent of the Amer ican Bar Associatio n.

CIVIL PROCEDURE UPDATE