In re Application of Grupo Unidos por el Canal S.A., No. 14-mc-80277 (N.D. Cal. Apr. 21, 2015) [click for opinion]

Grupo Unidos por el Canal ("GUPC"), a Panama-based company owned by four global construction firms, entered into a contract with Autoridad del Canal de Panama ("ACP"), a legal entity of the Republic of Panama, to build a new set of locks for the Panama Canal. The contract contained an arbitration clause providing that any dispute arising from the project shall be subject to private arbitration in Miami under the Rules of Arbitration of the International Chamber of Commerce ("ICC"). A dispute arose and GUPC and several co-claimants commenced ICC arbitration against ACP in Florida pursuant to the arbitration clause.

Prior to the exchange of document requests in the arbitration, GUPC filed an ex parte application in the U.S. District Court for the Northern District of California to compel certain documents from URS, a California-based third party advisor to ACP, pursuant to 28 U.S.C. § 1782 ("Section 1782"). Section 1782 authorizes the court to assist a "foreign or international tribunal" by ordering discovery. However, GUPC did not disclose that the venue of the pending arbitration was in Florida, but instead described it as an "international arbitration." GUPC likewise did not disclose that the arbitration was a contractual private arbitration. The court granted the application and allowed GUPC to issue a subpoena on URS for documents. Upon learning of the subpoena, ACP instructed URS to refuse GUPC any further review of its documents. GUPC then filed a motion to compel URS to comply with the subpoena. ACP filed a motion to intervene and to quash the subpoena.

The first issue before the court was whether ACP could intervene in the Section 1782 application. The court held permissive intervention was appropriate because ACP's motion was timely filed, the motion to quash shared common questions of law and fact as to the Section 1782 application, and GUPC suffered no prejudice or delay.

The second and main issue before the court was whether the private arbitration constituted a "tribunal" under Section 1782. The court noted that various courts had split over whether private contractual arbitration qualified as a "foreign or international tribunal" under Section 1782 following the Supreme Court's 2004 decision in Intel Corp. v. Advanced Micro Devices, Inc. The Supreme Court did not address whether a private arbitral tribunal was a "foreign or international tribunal" in its decision, but quoted a law review article that suggested that arbitral tribunals fell within the definition.

The district court held that private arbitrations established by contract are categorically excluded from the term "tribunals" for the purposes of Section 1782. The court adopted the Second and Fifth Circuits' analysis of the legislative history of the statute, which held the absence of any reference to private disputes in the statute and House and Senate committee reports indicated that Congress did not consider private arbitration when drafting the statute. The term "international tribunal" was originally derived from a statute that applied only to intergovernmental tribunals, suggesting Congress had no intent to extend the statute to private arbitrations. Finally, a broad interpretation of Section 1782's reach would conflict with the statutory provisions that limit evidence gathering in proceedings before domestic arbitral panels. Accordingly, the court granted ACP's motion to intervene and motion to quash the Section 1782 subpoena, and denied the GUPC's motion to compel.