In a decision filed August 6, 2009, the U.S. Court of Appeals for the Fifth Circuit affirmed the district court’s denial of a request under 28 U.S.C. § 1782 for discovery for use in a private international arbitration proceeding. Section 1782 provides a mechanism by which parties to a foreign or international proceeding may petition a federal district court to order a party residing in that district to provide documentary or testimonial evidence to a foreign or international tribunal. Thedecision, which is unpublished, can be found by clicking here.

The Underlying Case

A party to an arbitration (the “Requesting Party”) brought suit to obtain discovery from a party in the United States for use in a private international arbitration in Geneva, Switzerland. The arbitration is being conducted pursuant to the parties’ agreement under the United Nations Commission on International Trade Law (UNCITRAL) arbitration rules, El Salvadoran substantive law, and Swiss procedural law.

The Swiss arbitral tribunal rejected the Requesting Party’s request for broad discovery and issued an order limiting document production to those papers that were “relevant and material to the outcome of the case.” The tribunal also established a time line for serving document requests and issuing rulings on any objections.

The Requesting Party filed, ex parte, applications under Section 1782 in two federal district courts (the District of Delaware and the Southern District of Texas) to obtain the production of documents and depositions. Both district courts granted the applications, and the Requesting Party issued document production requests and deposition subpoenas. Until this point, neither the parties to which the document requests and deposition subpoenas were directed (the “Responding Parties”), nor the tribunal, had been informed of the Section 1782 applications.

The Motion for Protection

The Responding Parties opposed the applications in the Texas district court, arguing that the Requesting Party made material misrepresentations in its application and failed to apprise the court of Second and Fifth Circuit opinions concerning a party’s ability to compel discovery for use in an arbitration under the Section 1782. The tribunal also issued an order noting that it did not support the Requesting Parties’ attempt to secure discovery in this manner.

The Texas district court quashed the outstanding discovery requests. Relying on the Fifth Circuit’s precedent in Republic of Kazakhstan v. Biedermann International, the court held that Section1782 did not apply to discovery for use in a private international arbitration. The court also held that even if it did have the authority under Section 1782, “it would not [grant the application], out of respect for the efficient administration of the Swiss arbitration.”

The Appeal

The Requesting Party appealed the district court’s ruling and moved for an expedited appeal, arguing that its applications would be rendered moot if the evidentiary hearing for the arbitration were to take place before the court ruled. The Fifth Circuit denied the motion for an expedited appeal.

After the evidentiary hearing in the arbitration concluded, one of the Responding Parties filed a motion to dismiss the Requesting Party’s appeal of the district court decision as moot. The Responding Party argued that because the evidentiary hearing for the arbitration had concluded and the tribunal had closed the evidence, the discovery the Requesting Party sought with its § 1782 application could no longer be used in the arbitration, and thus there no longer a live case or controversy for the court to address.

The Appeal Was Not Moot

The Fifth Circuit noted that it had never previously addressed the issue of mootness with respect to a request for discovery under Section 1782. Nonetheless, the court recognized that, under UNCITRAL arbitration rules, an “arbitral tribunal may, if it considers it necessary owing to exceptional circumstances, decide, on its own motion or upon application of a party, to reopen the hearings at any time before the award is made.” Thus, the court concluded that an actual controversy still existed and addressed the merits of the appeal.

Requesting Party’s Section 1782 Application Is Denied

In Republic of Kazakhstan v. Biedermann International, the Fifth Circuit held that a “tribunal” within the meaning of Section 1782 did not include a private international arbitral tribunal, and thus did not apply to discovery sought for use in such a proceeding. The Court found that its decision in Biedermann controlled, and that the district court’s reliance on that case in denying the Requesting Party’s Section 1782 application was correct.

In so holding, the Court rejected the Requesting Party’s reliance on the U.S. Supreme Court’s decision in Intel Corp. v. Advanced Micro Devices, Inc., because that case did not address whether a private international arbitration tribunal qualifies as a “tribunal” under Section 1782.