First Tuesday Update is our monthly take on current issues in commercial disputes, international arbitration, and judgment enforcement. On March 22, the United States Supreme Court granted cert in Servotronics, Inc. v. Rolls-Royce PLC and Boeing, to resolve a circuit split over the meaning of "foreign or international tribunal" in 28 U.S.C. § 1782 and whether that term includes private international arbitrations. See Order List: 592 U.S. (March 22, 2021); see also Servotronics, Inc., Petitioner v. Rolls-Royce PLC, et al., No. 20-794. The Supreme Court has never addressed whether § 1782 authorizes district courts to order discovery for use in private international arbitration. The Fourth and Sixth Circuits have held that private international arbitrations are "foreign or international tribunals" but the Second, Fifth, and Seventh Circuits have held the opposite. The Third and Ninth Circuits have cases pending on this issue now.
This circuit-split is particularly ripe because the Fourth and Seventh Circuit decisions arise from the same English arbitration. The Fourth Circuit permitted a deposition, but the Seventh Circuit (which issued the order now under Supreme Court review) quashed a document subpoena. Rarely does a split involve the same proceeding and same parties (including the non-party target of the discovery - Boeing).
We wrote about this topic previously in 2019, see Sixth Circuit Allows § 1782 Discovery in Private International Arbitration, and predicted that the US Supreme Court may be interested in resolving the then circuit-split (which has since increased), given its opinion in Intel Corp. v. Advanced Micro Devices, Inc., 542 US 241 (2004). We should have a resolution this term about the scope of § 1782 and an end to this part of the nearly constant debate regarding whether US-style discovery is encroaching on the principles of international arbitration.
28 U.S.C. § 1782(a)—Assistance to foreign and international tribunals and to litigants before such tribunals—provides district courts the authority to order a person "to give his testimony or statement or to produce a document or other thing for use in a proceeding in a foreign or international tribunal, . . . ." Id. (emphasis added). The statute does not define "foreign or international tribunal" and the courts of appeals have reached differing interpretations about whether that phrase includes private international arbitrations.
Servotronics involves a private international arbitration pending under the Rules of the Chartered Institute of Arbitrators in England. In early 2016, an aircraft engine tailpipe fire occurred during a test flight of a Boeing 787 Dreamliner. Boeing sought compensation from Rolls-Royce, which constructed the engine. Rolls-Royce settled the matter and paid Boeing $12 million. Rolls-Royce sought reimbursement from Servotronics, one of Rolls-Royce's subcontractors. Servotronics disputed liability asserting that its work did not cause the issue. Unable to reach a resolution, Rolls-Royce commenced arbitration against Servotronics.
Servotronics sought to obtain evidence in the US from Boeing regarding the incident. Servotronics sought and obtained a deposition of certain Boeing employees in the District of South Carolina, which the Fourth Circuit affirmed. Servotronics also filed an ex parte application for § 1782 document discovery in the Northern District of Illinois. At first the request was granted, but after the subpoena for documents was served, the District Court granted Rolls-Royce and Boeing’s motion to quash the subpoena and the Seventh Circuit affirmed.
The Seventh Circuit followed the Second Circuit's ruling in National Broadcasting Co. v. Bear Stearns & Co., 165 F.3d 184 (2d Circ. 1999) and held that the term "foreign or international tribunal . . . does not unambiguously exclude private arbitration panels." Id. at 188 (original emphasis). Given the ambiguity, the Seventh Circuit followed the Second Circuit's analysis that the legislative history's "absence of any reference to private dispute resolution proceedings strongly suggests that Congress did not consider them in drafting the statute." Id. at 189.
The Supreme Court has never decided whether § 1782 authorizes discovery for use in private arbitrations. In Intel Corp. v. Advanced Micro Devices, Inc., 542 U.S. 241 (2004), the Court considered whether Section 1782(a) authorized discovery in connection with a proceeding pending before the European Commission. The Court held that the European Commission was a foreign tribunal "to the extent it acts as a first-instance decisionmaker." Id. at 243. But Intel was limited to a quasi-governmental agency and not private arbitration.
The Fourth and Sixth Circuits have held that private arbitrations constitute a "foreign or international tribunal" under § 1782. The Sixth Circuit considered this issue in Abdul Latif Jameel Transportation Co. v. FedEx Corp., 939 F.3d 710 (6th Cir. 2019), which we have written about in these pages before, and the Fourth Circuit held the same in Servotronics, Inc. v. Boeing Co., 954 F.3d 209 (4th Cir. 2020) ("Servotronics I") (holding that district courts may order discovery to aid a private international arbitration under § 1782).
The Second, Fifth, and Seventh Circuits have all reached a different conclusion than the Fourth and Sixth Circuits when construing "tribunal" in Section 1782(a). In short, those Circuits hold that Section 1782(a) does not authorize discovery for use in private international arbitrations. See National Broadcasting Corp. v. Bear Stearns & Co., 165 F.3d 184 (2d Cir. 1999); Republic of Kazakhstan v. Biedermann International, 168 F.3d 880 (5th Cir. 1999); Servotronics, Inc. v. Rolls-Royce PLC, 975 F.3d 689 (2020).
This will be a case to watch as the decision could have a significant impact on private international arbitration. Steptoe litigators have extensive experience both obtaining and opposing discovery pursuant to 28 U.S.C. § 1782 to support foreign proceedings. Michael Miller, Evan Glassman, and Charles Michael have repeatedly obtained or defeated § 1782 discovery for proceedings abroad, including recently successfully quashing an application for § 1782 discovery in the Southern District of Florida. See In re Olga Kurbatova, Case No. 18-mc-81554, (S.D. Fla. 2019). We can help with these and other cross-border arbitration issues, including enforcing international arbitral awards as judgments in courts throughout the world.