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Obtaining Discovery in the US for Use in International Arbitrations
Practical Law Legal Update 4-536-7765 (Approx. 5 pages)
Obtaining Discovery in the US for Use in International Arbitrations
by Practical Law Litigation (US)
| Published on 13 Aug 2013 • USA (National/Federal) |
The availability of discovery through federal courts for use in international private arbitration proceedings varies depending on the federal circuit in which the request for discovery is made. This Update examines the differences among the federal courts that have ruled on the issue.
In June 2013, the US District Court for the Central District of California denied a petitioner's request for discovery for use in a private arbitration (In re Dubey, No. 13-677, , at *1 (C.D. Cal. June 7, 2013)). The district court denied the petitioner's request for discovery because it found that a private arbitration did not qualify as a tribunal under 28 U.S.C. § 1782(a) (Dubey, , at *2). If the US Court of Appeals for the Ninth Circuit decides the issue of whether an international private arbitration is a tribunal, it will further a split among the federal circuits concerning a party's ability to obtain discovery in the US for use in international private arbitrations.
Section 1782 and the Intel Decision
The US Code permits a party to obtain an order from a US district court that compels production of discovery for use in proceedings only before international tribunals (28 U.S.C. § 1782(a)). Before the US Supreme Court's opinion in Intel Corp. v. Advanced Micro Devices, Inc. in 2004, federal courts consistently held that international private arbitrations were not tribunals for the purposes of Section 1782 (Nat'l Broad. Co. v. Bear Stearns & Co., 165 F.3d 184, 188-91 (2d Cir. 1999); Kazakhstan v. Biedermann Int'l, 168 F.3d 880, 883 (5th Cir. 1999)). Since the US Supreme Court's decision in Intel, however, federal appellate and district courts have issued differing opinions on whether discovery may be ordered by a court under Section 1782 for use in international private arbitrations.
In Intel, the US Supreme Court provided that courts may issue an order under 28 U.S.C. § 1782(a) for discovery in the US for use in foreign proceedings if:
- The petitioner requesting discovery is an interested person in the foreign proceeding.
- The discovery sought by the petitioner will be used for a proceeding before a tribunal.
In ruling that an order for discovery for use in a foreign administrative proceeding should have been granted by the district court for use in a proceeding before a European administrative agency, the Supreme Court broadened the definition of what is a tribunal for the purposes of Section 1782. The Court held that the administrative agency qualified as a tribunal under the statute because it functioned as a decision maker in the first instance for a proceeding that was eventually subject to judicial review. (Intel, 542 U.S. at 247.)
Split among Federal Courts
Since the Intel decision, federal circuit and district courts have been split about whether a petitioner may obtain discovery in the US for an international private arbitration. Although some courts have held that the Supreme Court's broad interpretation of what is a tribunal for the purposes of Section 1782 applies to international private arbitrations, other courts have refused to do so.
US Circuit Courts
This split first occurred in 2012 when the US Court of Appeals for the Eleventh Circuit upheld a district court's order compelling discovery (In re Consorcio Ecuatoriano de Telecomunicaciones S.A. v. JAS Forwarding (USA) Inc., 685 F.3d 987, 1001 (11th Cir. 2012)). In affirming the lower court's opinion, the Eleventh Circuit concluded that an arbitration panel, like the administrative agency at issue in Intel, was a first-instance decisionmaker whose order was subject to judicial review, and was therefore a tribunal under Section 1782 (Consorcio, 685 F.3d at 990). The appellee filed a petition of rehearing, which is currently pending before the court.
The Second and Fifth Circuits, on the other hand, continue to hold that discovery is unobtainable under Section 1782 for use in international private arbitrations (see Nat'l Broad. Co., 165 F.3d at 188-91; Kazakhstan, 168 F.3d at 883). However, both circuits, although declining to address or overturn their prior decisions, have recently upheld district court orders compelling production of discovery under Section 1782 for use in international arbitrations:
- Chevron Corp. v. Berlinger. The Second Circuit upheld the district court's order compelling discovery because the petitioner intended to use the requested discovery in ongoing litigation in addition to an international private litigation (629 F.3d 297, 310 (2d Cir. 2011)).
- Republic of Ecuador v. Connor. The Fifth Circuit upheld the district court's order compelling discovery because, under principles of judicial estoppel, the respondent could not rely on the argument that an international private arbitration was not a tribunal for Section 1782 purposes after requesting and obtaining discovery under the statute for use in an international private arbitration in other circuits (708 F.3d 651, 654 (5th Cir. 2013)) (see Legal Update, Fifth Circuit invokes judicial estoppel to grant interlocutory discovery request in support of ancillary non-domestic arbitration proceeding).
US District Courts
Although the Second, Fifth and Eleventh Circuits have ruled on this issue, other federal circuits have not issued opinions about whether an international private arbitration qualifies as a tribunal for Section 1782. As a result, the district courts in the remaining circuits have issued conflicting opinions. Many US district courts have permitted discovery of materials for use in international private arbitrations, including:
- The US District Court for the District of New Jersey (In re Mesa Power Group, LLC, , at *5 (D.N.J. Nov. 20, 2012)).
- The US District Court for the District of Massachusetts (Chevron Corp. v. Shefftz, 754 F. Supp. 2d 254, 260 (D. Mass. 2010)).
- The US District Court for the Northern District of Georgia (In re Roz Trading Ltd., 469 F. Supp. 2d 1221, 1222 (N.D. Ga. 2006)).
- The US District Court for the District of Delaware (Comision Ejecutiva, Hidroelectica Del Rio Lempa v. Nejapa Power Co., No. 08-135, , at *1 (D. Del. Oct. 14, 2008)).
Other US district courts, however, have held that an international private arbitration is not a tribunal for Section 1782 purposes, including the US District Court for the Northern District of Illinois (In re Arbitration in London, England, 626 F. Supp. 2d 882, 886 (N.D. Ill. 2009)).
As more federal circuit and district courts address the availability of Section 1782 discovery orders for international private arbitrations, it may not be long before the US Supreme Court hears this issue again. Currently, however, counsel should recognize the existing split in authority when creating a discovery strategy for arbitration conducted abroad.
For more information about obtaining discovery in the US for use in an international private arbitration and obtaining evidence in the US for use abroad in general, see Practice Note, International Litigation: Discovery in the US in Aid of Proceedings Held Abroad.