United States Supreme Court Restricts Availability of U.S. Discovery in Support of International Arbitration

Events concerned in litigation exterior the U.S. have lengthy had a helpful information-gathering instrument at their disposal: a U.S. statute permitting them to acquire by court docket order testimony and paperwork from individuals positioned in the U.S. The statute, 28 U.S.C. § 1782(a), or “Section 1782,” authorizes U.S. district courts to order individuals “resid[ing] or found” in their district to present testimony or produce proof to be used in a continuing in a “foreign or international tribunal.” Courts in the U.S. have lengthy disagreed about whether or not and when events to worldwide arbitrations can use Part 1782. The U.S. Supreme Court has now held they typically can’t. On June 13, the Court issued a unanimous opinion in ZF Automotive US, Inc., v. Luxshare, LTD, holding that Part 1782 applies “only [to] governmental or intergovernmental adjudicative bodies.” Accordingly, Part 1782 can’t be used to acquire proof for personal industrial arbitrations or for investor-state arbitrations, except a international authorities has conferred governmental authority upon the arbitral panel. 

In reaching this end result, the Court primarily centered on the which means of the statutory phrase “foreign or international tribunal.” The Court held {that a} “foreign tribunal” is a tribunal belonging to a international nation, reasonably than a tribunal that’s merely positioned in a international nation. The Court additional held that an “international tribunal” is a tribunal involving two or extra nations, reasonably than two or extra nationalities. Therefore a “foreign tribunal” is a tribunal imbued with governmental authority by one nation, and an “international tribunal” is a tribunal imbued with governmental authority by a number of nations. 

The Court additionally was influenced by legislative historical past, suggesting that the “animating purpose of § 1782 is comity” between nations, and that “[i]t is difficult to see how enlisting district courts to help private bodies would serve that end.” 

Lastly, the Court highlighted the truth that studying Part 1782 to cowl non-public our bodies can be in “significant tension” with the Federal Arbitration Act (“FAA”), which governs home arbitration, as a result of Part 1782 “permits much broader discovery than the FAA allows.” The Court stated it was troublesome to conceive a rationale for giving events to personal international arbitrations such broad entry to federal-court discovery help in the U.S. whereas precluding such discovery help for litigants in home arbitrations.

The Court utilized its holding to 2 consolidated instances. In a single case, two industrial events agreed that they’d arbitrate their disputes below the arbitration guidelines of the German Establishment of Arbitration e.V. (“DIS”), a non-public dispute-resolution group primarily based in Berlin. As a result of no authorities was concerned in creating the arbitration panel or prescribing its procedures, the Court held that the panel didn’t qualify as a governmental physique and due to this fact the events couldn’t use Part 1782 to acquire discovery.

Within the second case, a Russian company initiated an arbitration in opposition to the Lithuanian authorities below a bilateral funding treaty between the 2 nations. Pursuant to the treaty, the arbitration was earlier than an advert hoc arbitration panel, with every celebration choosing one arbitrator and people two selecting a 3rd. To find that the advert hoc arbitration panel didn’t qualify as a “governmental or intergovernmental adjudicative body,” the Court pointed to a number of key information: that the treaty authorizing arbitration didn’t create an arbitration panel; the panel functioned independently of and was not affiliated with both the Lithuanian and Russian authorities; the panel consisted of people chosen by the events with none official affiliation with any public physique; the panel obtained no authorities funding; the proceedings had been confidential; and the award may solely be made public with the events’ consent.

In sum, the Supreme Court’s ruling makes clear that usually neither a international non-public industrial arbitral panel nor an advert hoc panel adjudicating investor-state disputes qualifies as a “foreign or international tribunal” below Part 1782—solely panels on which a international authorities conferred governmental authority qualify.  

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