In February 2013, the Fifth Circuit became the most recent US appellate court to consider a request for discovery under 28 USC § 1782 for use in a private international arbitration. As detailed in a previous edition of this newsletter, § 1782 permits “any interested person” to petition a US district court for a discovery order directing a person located in that district to produce documents, tangible evidence and/or testimony “for use in a proceeding in a foreign or international tribunal”. The Fifth Circuit had previously held, in Republic of Kazakhstan v. Biedermann Int’l, 168 F.3d 880 (5th Cir. 1999), that an international arbitration tribunal is not a “foreign or international tribunal” under § 1782.
In Republic of Ecuador v. Connor, Nos. 12-20122, 12-20123, 2013 WL 539011 (5th Cir. Feb. 13, 2013), the Fifth Circuit did not abandon its holding in Biedermann but rather found that a discovery request pursuant to § 1782 for use in an international arbitration proceeding should have been considered by the district court based on the doctrine of judicial estoppel. The case arose out of an arbitration filed by Chevron against the Republic of Ecuador under the UNCITRAL arbitration rules, as permitted by a bilateral investment treaty between the US and Ecuador (the “BIT arbitration”). Ecuador sought discovery from an individual, John Connor, and his company, GSI Environmental, in the Southern District of Texas for use in the BIT arbitration. Chevron intervened in the district court and argued that the requested discovery was impermissible under the Biedermann precedent. The district court agreed with Chevron and denied Ecuador’s requested discovery.
On appeal, the Fifth Circuit considered the fact that both Chevron and Ecuador had sought discovery orders pursuant to § 1782 in numerous US courts and that Chevron itself had obtained at least 20 such orders from other district courts. The Fifth Circuit noted that Chevron obtained these discovery orders by “contending, opposite to its current position, that the BIT arbitration is an ‘international tribunal’” under § 1782. The court found that Chevron had “deliberately taken inconsistent positions on the availability of § 1782 discovery” and that “if Chevron is permitted to shield itself under Biedermann against Ecuador’s current discovery request, it will have gained an unfair advantage over its adversary”. Thus, the court found that Chevron should be judicially estopped from asserting a legal position contrary to that which it had successfully argued in other courts, and remanded the case so that the district court could reconsider Ecuador’s request for discovery as a matter of its discretion.