Congress long ago generously provided for American judicial assistance in obtaining discovery in the United States “for use in a proceeding in a foreign or international tribunal” without requiring reciprocity from the country in which such tribunal is seated. This altruistic legislation, intended as an example (hopefully to be emulated by other countries), is set out in the increasingly popular yet controversial statute, 28 U.S.C. § 1782.
The fly in the ointment regarding this generous legislation, however, is the enduring fundamental issue of whether a foreign or international private commercial arbitration is such a “tribunal” for these purposes. The Circuit Courts of Appeals that have ruled on that issue have split down the middle: the Fourth and Sixth Circuit held relatively recently in the affirmative, while the Second and Fifth Circuits have held just the opposite. (The Second Circuit’s most recent decision in that regard was issued in July 2020, reaffirming its earlier decision in 1999 to this same effect.)
With the right case as a vehicle, the issue seems destined for resolution by the U.S. Supreme Court.
In the meantime, other federal courts will undoubtedly weigh in on one side or the other. Very recently, for example, a Delaware District Court ruled, consistent with two prior decisions from that court, that “private commercial arbitrations are not ‘tribunals’ within the meaning of § 1782.” In re Ex Parte Application of Axion Holdings Cyprus Ltd.
While the Court of Appeals for the Third Circuit, which includes Delaware, has not ruled on the issue, this is the third such decision to the same effect by Delaware District Court judges. See In re Storag Etzel GmbH, 2020 WL 1849714 (D. Del. Apr. 13, 2020); In re EWE Gasspeicher GmbH, 2020 WL 1272612 (D. Del. Mar. 17, 2020).
Furthermore, the Axion court quickly disposed of a weaker argument by the petitioner there that since the private body administering the arbitration proceedings in question – i.e., the London Court of International Arbitration (“LCIA”) – and tribunals operating under its rules are governed by the U.K.’s Arbitration Act of 1996, such tribunals “act with authority of the state,” and thus properly fall within the ambit of the “foreign or international tribunal” category for purposes of 28 U.S.C. § 1782. The Delaware District Court pointed out the obvious: that the U.K.’s Arbitration Act is analogous to the Federal Arbitration Act in the U.S. Both statutes describe the extent of judicial oversight of arbitration proceedings, and neither statute thereby makes private arbitrators into state actors for purposes of the statute in question. The court opined that judicial processes abroad similar to those in the U.S. do not enable a foreign private arbitral body to “act with authority of the state.” Hence, the LCIA (and an arbitrator acting under its rules) “does not act with sufficient state authority to independently qualify as a tribunal” for purposes of the statute in question.
There will undoubtedly be many more decisions concerning this important question because of the considerable potential value of U.S. discovery in foreign and international private commercial arbitration proceedings. Right now, the disparity of opportunity and prospects in that regard among geographic jurisdictions in the U.S. is enormous. Hopefully, SCOTUS will resolve the matter sooner rather than later.