In an opinion last Thursday, the Sixth Circuit held that a federal district court may order discovery for use in a foreign private arbitration. 28 U.S.C. § 1782(a) authorizes discovery “for use in a proceeding in a foreign or international tribunal” upon application by “any interested person.” The Sixth Circuit determined that private international arbitration is a “foreign tribunal” for purposes of that statute.
The dispute underlying this case arose between Abdul Latif Jameel Transportation Company Limited (“ALJ”), a Saudi corporation, and FedEx International Incorporation (“FedEx International”) related to an agreement between the two parties for delivery services in Saudi Arabia. Disputes under the agreement were to be arbitrated in Dubai pursuant to the rules of the Dubai International Financial Centre-London Court of International Arbitration (“DIFC-LCIA”). ALJ initiated arbitration before the DIFC-LCIA and then filed a § 1782(a) petition in the United States District Court for the Western District of Tennessee to compel discovery from US-based FedEx Corp. ALJ sought a subpoena for documents and deposition testimony of a corporate representative from FedEx Corp. FedEx Corp. is not a party to the service agreement or to the international arbitration.
The district court denied ALJ’s application, holding that the phrase “foreign or international tribunal” in § 1782(a) did not encompass private international arbitrations. ALJ appealed.
The Sixth Circuit held that “[u]pon careful consideration of the statutory text, the meaning of that text based on common definitions and usage of the language at issue, as well as the statutory context and history of § 1782(a), . . . this provision permits discovery for use in the private commercial arbitration at issue.”
The Court reached its holding by considering the use of the word “tribunal” in dictionaries, legal writing, and statutory sources. The Court first considered dictionary definitions of the word “tribunal” and determined that “[t]here is dictionary support for ascribing a meaning that includes private arbitral panels.” Op. at 10. The Court then considered the use of the word “tribunal” in legal writing, and found “support in American courts’ historical and continuing usage of the word to describe private arbitration.” Op. at 11. Specifically, the Court pointed to language in Sixth Circuit and Supreme Court opinions that used the term “tribunal” to include private arbitration. Op. at 13 (citing Toledo Steamship Co. v. Zenith Transportation Co., 184 F. 391, 400 (6th Cir. 1911); Bernhardt v. Polygraphic Co. of America, 350 US 198, 203 (1956)); Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, 473 US 614 (1985)). Finally, the Court considered other uses of the word “tribunal” in the statute, and found that usage of the term in the statute “does not compel a narrower understanding of that word’s meaning.” Op. at 14.
The Sixth Circuit is not the first court to consider whether § 1782 applies to private international arbitration. In fact, the Sixth Circuit’s opinion diverges from decisions by the Second and Fifth Circuits. See Republic of Kazakhstan v. Biedermann Int’l, 168 F.3d 880, 883 (5th Cir. 1999) (“Biedermann”); National Broadcasting Co., Inc. v. Bear Stearns & Co., Inc., 165 F.3d 184 (2d Cir. 1999) (“NBC”). In those decisions, the Second and Fifth Circuits determined that the word “tribunal” in § 1782(a) does not clearly exclude private arbitrations but that the scope of the word is ambiguous. See Biedermann, 168 F.3d at 881; NBC, 165 F.3d at 188. After considering the legislative history of § 1782(a) as well as policy considerations, the Second and Fifth Circuits concluded that “tribunal” includes only “governmental or intergovernmental arbitral tribunals and conventional courts and other state-sponsored adjudicatory bodies.” NBC, 165 F.3d at 190; see Biedermann, 168 F.3d at 882.
The Sixth Circuit disagreed, reasoning that the Second and Fifth Circuits were misguided by relying on legislative history. The Court noted that “some scholars and judges have questioned the reliability of legislative history as an indicator of statutory meaning.” Op. at 20. And, even “[a]ssuming that legislative history is a helpful aid in some cases,” the Court maintained that the legislative history does not contradict the Court’s conclusion here. Op. at 21.
In 2004, the United States Supreme Court considered a similar, but factually different, question: whether a proceeding before the Directorate General for Competition in the European Commission is a foreign tribunal. See Intel Corp. v. Advanced Micro Devices, Inc., 542 US 241 (2004). The Supreme Court held that the European Commission is a foreign tribunal “to the extent it acts as a first-instance decisionmaker.” Id. at 243.
However, Intel did not involve private international arbitration and did not cite NBC or Biedermann, and courts have thus far been split on whether Intel answers the question of whether § 1782(a) applies to private international arbitration. For example:
- In re Consorcio Ecuatoriano de Telecomunicaciones S.A. v. JAS Forwarding (USA), Inc., 685 F.3d 987 (11th Cir. 2012), opinion vacated and superseded sub nom. Application of Consorcio Ecuatoriano de Telecomunicaciones S.A. v. JAS Forwarding (USA), Inc., 747 F.3d 1262 (11th Cir. 2014): The Eleventh Circuit held that a private arbitral tribunal in Ecuador is a foreign tribunal. The Eleventh Circuit subsequently vacated that opinion, holding that the petitioner had adequately shown that civil and criminal court proceedings were within “reasonable contemplation” as required by the statute, so the court need not have addressed whether the pending international arbitration was a tribunal.
- In re Roz Trading Ltd., 469 F. Supp. 2d 1221 (N.D. Ga. 2006): The Northern District of Georgia held that an Austrian private arbitral tribunal is a foreign tribunal.
- El Paso Corp. v. La Comision Ejecutiva Hidroelectrica Del Rio Lempa, 341 F. App’x 31 (5th Cir. 2009): The Fifth Circuit held that Intel did not unequivocally direct the overruling of Biedermann, and held that a private Swiss arbitral forum was not a foreign tribunal.
This case shows the Sixth Circuit joining those courts that hold that § 1782(a) applies to private international arbitration.
The Sixth Circuit then considered the scope of permissible discovery and, specifically, a comparison between the breadth of § 1782(a) discovery compared with Federal Arbitration Act discovery. FedEx Corp. argued that § 1782(a) provides broader discovery than is available to parties in domestic arbitration under the Federal Arbitration Act (“FAA”), 9 U.S.C. § 1 et seq. For example, § 1782(a) permits “any interested party” to seek a discovery order from a district court; by contrast, the FAA states only that arbitration panels themselves may order the production of witnesses or documents and seek enforcement of those orders in federal district court. It would be incongruous, according to FedEx Corp., to permit foreign parties in arbitration overseas broader discovery than United States parties in arbitration here.
The Sixth Circuit disagreed. Op. at 23. The Supreme Court in Intel rejected similar proportionality arguments about the breadth of discovery assistance provided by § 1782(a). After determining that the text and history of § 1782(a) failed to support a “foreign-discoverability” requirement, the Supreme Court rejected the “suggestion that a § 1782(a) applicant must show that United States law would allow discovery in domestic litigation analogous to the foreign proceeding.” The Supreme Court reasoned, “Section 1782 is a provision for assistance to tribunals abroad. It does not direct United States courts to engage in comparative analysis to determine whether analogous proceedings exist here.” Intel, 542 US at 261–63.
Applying Intel’s reasoning, the Sixth Circuit declined to conclude that “simply because similar discovery devices may not be available in domestic private arbitration, § 1782(a) categorically does not apply to foreign or international private arbitration.” Op. at 24.
This case highlights the continuation of the split on whether § 1782 provides for discovery in private international arbitration, which makes the geographic location of the sought-after information important. Until the Supreme Court weighs in to resolve the split, § 1782 may be seen as a useful means of third-party discovery in international private arbitration for discovery located within jurisdictions that view private arbitral forums as foreign tribunals for purposes of the statute. If you have any questions about this legal alert, please feel free to contact any of the attorneys listed under 'Related People/Contributors' or the Eversheds Sutherland attorney with whom you regularly work.