In Re Ex Parte Application of Kleimar N.V., No. 1:16-mc-00355 (S.D.N.Y. Nov. 16, 2016) [click for opinion]
Plaintiff Kleimar N.V. and Defendant Dalian Dongzhan Group Co. Ltd. were engaged in a series of arbitrations in London before the London Maritime Arbitration Association. The court granted Kleimar's ex parte application to seek discovery of third-parties, including Vale S.A., in connection with the London arbitrations. Vale moved to vacate the discovery order and quash the accompanying subpoena.
Vale argued that: (1) Kleimar failed to satisfy the requirements of 28 U.S.C. § 1782 because Vale did not reside in, nor was it found in, the Southern District of New York, and because the London arbitration tribunals do not qualify as "foreign tribunals" as required under Section 1782; (2) the subpoena sought confidential commercial information; (3) the subpoena subjected Vale to an undue burden; and (4) Vale was not properly served.
The court first found that Kleimar had met its burden to prove that Vale resides in or is found in New York for purposes of Section 1782. The court based its finding on the fact that Vale trades American Depository Receipts on the New York Stock Exchange, regularly files forms with the SEC, lists a wholly-owned subsidiary (that is registered to do business in New York and is a defendant in an action in New York where it has not contested jurisdiction) as its agent for service and authorized representative in the U.S., and conducts systematic and regular business in the U.S. and New York.
The court also found that a private, commercial tribunal, such as the London Maritime Arbitration Association, qualifies as a "foreign tribunal" under the meaning of Section 1782. While the Second Circuit had reached the opposite conclusion in Nat'l Broad Co. v. Bear Sterns & Co., the Second Circuit has not weighed in on this issue since the Supreme Court, in Intel Corp. v. Advanced Micro Devices, Inc., suggested that it may consider private, foreign arbitrations within the scope of Section 1782. The court therefore chose to follow the reasoning of courts in other jurisdictions that, since Intel, have found that a private, commercial tribunal is a "foreign tribunal" within the meaning of Section 1782.
The court then found that Vale's confidentiality concerns could be addressed by a protective order and that Vale had failed to show that the subpoena was an undue burden. Finally, the court found that service upon Vale's U.S. subsidiary was proper. The court thus denied Vale's motion to vacate the discovery order and motion to quash the subpoena.