DC District Court exercises discretion to deny Section 1782 petition | Practical Law

DC District Court exercises discretion to deny Section 1782 petition | Practical Law

Abby Cohen Smutny (Partner) and Lee A. Steven (Counsel), Lauren Mandell (Associate), White & Case LLP

DC District Court exercises discretion to deny Section 1782 petition

Practical Law Legal Update 9-503-2063 (Approx. 3 pages)

DC District Court exercises discretion to deny Section 1782 petition

Published on 01 Sep 2010 • International, USA
Abby Cohen Smutny (Partner) and Lee A. Steven (Counsel), Lauren Mandell (Associate), White & Case LLP
The District Court for the District of Columbia has declined to order discovery in an ICSID arbitration pursuant to 28 U.S.C. § 1782, which allows a court to order discovery "for use in a proceeding in a foreign or international tribunal."
In In re Application of Caratube Int'l Oil Co., (D.D.C. Aug. 11, 2010), Caratube petitioned the court for discovery for use in its arbitration against the Republic of Kazakhstan. The discovery was directed at non-parties to the arbitration, whom Caratube claimed had acted on behalf of the Republic of Kazakhstan.
The court assumed without deciding that the ICSID tribunal was a "foreign or international tribunal" under section 1782, holding that, even if it were, discovery should be denied based upon the evaluation of the factors that the Supreme Court identified as relevant to a section 1782 petition in Intel Corp. v Advanced Micro Devices, Inc., 542 U.S. 241 (2004). The relevant factors for deciding a section 1782 petition include:
  • The party from whom discovery is sought.
  • The nature of the foreign tribunal, the character of the proceedings, and the receptivity of the tribunal to US judicial assistance.
  • Whether the request is an attempt to circumvent foreign proof-gathering restrictions.
The court held that, although the first factor favoured granting the petition because there is a greater need for judicial assistance to compel a non-party to cooperate with discovery requests, Caratube's petition should be denied because of the second and third factors. On the second factor, the court noted that it was reluctant to interfere with the ICSID process, which reflected the parties' bargained-for-expectations. The court added that Caratube waited more than a year after the ICSID tribunal issued a detailed schedule governing the proceedings before it moved the court for discovery. On the third factor, the court held that Caratube's petition was an attempt to circumvent the tribunal's control over the discovery process. The IBA Rules on the Taking of Evidence, which by agreement governed discovery in the ICSID proceeding, calls for the parties to request that the tribunal secure non-party discovery.
Interestingly, the court deferred to the ICSID tribunal even though the tribunal had denied Kazakhstan's request to order Caratube to cease and desist from its section 1782 petition. The tribunal stated that it would have liked Caratube to have sought its consent before pursuing judicial assistance, and it reserved decision on whether it would admit documents obtained as a result of the section 1782 petition, but it held that barring the petition was inappropriate.