{"id":11552,"date":"2022-06-28T18:01:53","date_gmt":"2022-06-28T18:01:53","guid":{"rendered":"https:\/\/www.rimonlaw.com\/?p=11552"},"modified":"2022-06-28T18:01:53","modified_gmt":"2022-06-28T18:01:53","slug":"supreme-court-narrows-availability-of-united-states-discovery-for-international-arbitration","status":"publish","type":"post","link":"https:\/\/www.rimonlaw.com\/supreme-court-narrows-availability-of-united-states-discovery-for-international-arbitration\/","title":{"rendered":"Supreme Court Narrows Availability of United States Discovery for International Arbitration"},"content":{"rendered":"

A unanimous Supreme Court on June 13 determined that 28 U.S.C. \u00a71782 (\u201cSection 1782\u201d) does not permit United States courts to order discovery for foreign or international \u201cprivate adjudicatory bodies\u201d.\u00a0 ZF Auto. US, Inc. v. Luxshare, Ltd<\/em>., No. 21-401, 2022 WL 2111355, *3 (2022)(\u201cZF Automotive Decision\u201d).\u00a0 Rather, the Supreme Court held that Section 1782 only permits discovery for foreign or international \u201cgovernmental or intergovernmental adjudicative bodies\u201d.\u00a0 Id. <\/em>\u00a0The decision clarifies that Section 1782 does not permit discovery for use in any private international arbitration.\u00a0 However, the decision leaves open the question of which type of arbitral tribunal may constitute a \u201cgovernmental or intergovernmental adjudicative body\u201d and still be ripe for discovery pursuant to Section 1782.<\/p>\n

Section 1782 by its terms permits a district court in the United States to order discovery \u201cfor use in a proceeding in a foreign or international tribunal, including criminal investigations conducted before formal accusation\u201d.\u00a0 28 U.S.C. \u00a71782.\u00a0 Prior to the ZF Automotive Decision, lower courts disagreed concerning if and when Section 1782 permitted discovery for use in international arbitration.\u00a0 In the one case where the Supreme Court had previously considered a different aspect of Section 1782, it had quoted in dicta a statement that a \u201ctribunal\u201d includes \u201cinvestigating magistrates, administrative and arbitral tribunals, and quasi-judicial agencies\u201d.\u00a0 See <\/em>Intel Corp. v. Advanced Micro Devices, Inc.,<\/em> 542 U.S. 241, 244-45 (2004).\u00a0 This caused many courts to determine that Section 1782 permitted discovery for private commercial international arbitration, while other courts disagreed.\u00a0 See, e.g., Servotronics, Inc. v. Boeing Co., 954 F.3d 209 (4th Cir. 2020) (private arbitral panel in United Kingdom was \u201cforeign or international tribunal\u201d)<\/em>; In re Application to Obtain Discovery for Use in Foreign Proc.,<\/em> 939 F.3d 710, 724 (6th Cir. 2019) (discovery available under Section 1782 for private international arbitration under the rules of the Dubai International Financial Centre-London Court of International Arbitration); Servotronics, Inc. v. Rolls-Royce PLC,<\/em> 975 F. 3d 689 (7th Cir. 2020), cert. granted, 141 S. Ct. 1684 (2021), and cert. dismissed, 142 S. Ct. 54 (2021) \u00a0(no discovery under Section 1782 for private international arbitration because a \u201cforeign or international tribunal\u201d is a \u201cstate-sponsored, public or quasi-governmental tribunal\u201d);\u00a0 El Paso Corp. v. La Comision Ejecutiva Hidroel\u00e9ctrica Del Rio Lempa,<\/em> 341 Fed. Appx. 31 (5th Cir. 2009) (no discovery as UNCITRAL Arbitration between state-owned El Salvadoran utility company and a private party is not a \u201cforeign or international tribunal\u201d) (citing Republic of Kazakhstan v. Biedermann Int\u2019l<\/em>, 168 F.3d 880, 882-83 (5th Cir. 1999)); NBC v. Bear Stearns & Co.<\/em>, 165 F.3d 184, 188-189 (2d Cir. 1999) (arbitral bodies created by governments or intergovernmental agreements are \u201ctribunals\u201d for the purposes of \u00a7 1782, but that arbitral bodies created by private parties are not foreign or international tribunals).<\/p>\n

The ZF Automotive Decision resulted from the consolidation of two underlying appeals.\u00a0 The first appeal (ZF Automotive US, Inc. v. Luxshare, Ltd<\/em>., No. 21-401) related to a request for discovery under Section 1782 for use in a private commercial arbitration between two private companies in accordance with the Arbitration Rules of the German Institution of Arbitration (\u201cDIS Arbitration\u201d).\u00a0 The district court determined in that case that discovery was available under Sixth Circuit precedent for this private DIS Arbitration and the Sixth Circuit did not stay that order pending appeal.\u00a0 The second appeal (AlixPartners, LLP v. The Fund for Protection of Investors\u2019 Rights in Foreign States<\/em>, No. 21-518) concerned an ad hoc UNCITRAL arbitration under a bilateral investment treaty between the Lithuanian government and a Russian corporation (\u201cLithuanian Arbitration\u201d).\u00a0 The Second Circuit held that discovery could proceed because the Lithuanian Arbitration was not like private arbitration but rather was a foreign or international arbitration.<\/p>\n

Justice Barrett writing for a unanimous Court explained that both appeals depended upon the correct interpretation of the phrase \u201cforeign or international tribunal\u201d in Section 1782.\u00a0 The Court stated that while the word \u201ctribunal\u201d standing alone does include private adjudicatory bodies, Section 1782 uses the phrase \u201cforeign or international tribunal\u201d which is more limited because the term \u201ctribunal\u201d is qualified.\u00a0 The Court first found that the phrase \u201cforeign tribunal\u201d means a \u201cgovernmental body\u201d belonging to another nation or country.\u00a0 \u201c[T]he tribunal must possess sovereign authority conferred by that nation\u201d.\u00a0 It then found that the phrase \u201cinternational tribunal\u201d means \u201ca tribunal imbued with governmental authority by multiple nations\u201d.\u00a0 The court based these interpretations on the dictionary definitions of the words that it thought most directly fit the context of the statute.<\/p>\n

The Court also explained that its interpretations were supported by the history of Section 1782 and by comparison to the FAA.\u00a0 The Court explained that Section 1782 \u201chas been about respecting foreign nations and the governmental and intergovernmental bodies they create\u201d; the \u201canimating purpose of \u00a71782 is comity\u201d.\u00a0 Thus, limiting the reach of Section 1782 to assisting bodies exercising governmental authority is consistent with the history and purpose of Section 1782.\u00a0 The Court also explained that limiting Section 1782 in this fashion makes sense because the Federal Arbitration Act (the \u201cFAA\u201d) which governs domestic arbitration provides for more limited discovery for use in domestic arbitration.\u00a0 \u201cIt\u2019s hard to conjure a rationale for giving parties to private parties to foreign arbitrations such broad access to federal-court discovery assistance in the United States while precluding such discovery assistance for litigants in domestic arbitration.\u201d<\/p>\n

The Court then determined that neither arbitration panel in the two appeals before it constituted governmental or intergovernmental adjudicative bodies.\u00a0 The DIS Arbitration was (a) between private parties; (b) agreed to in a private contract; (c) utilized a private dispute resolution organization using its own arbitral rues; and (d) the panel was formed by the parties.\u00a0 \u201cNo government is involved in creating the DIS panel or prescribing its procedures\u201d.\u00a0 Thus, the DIS Arbitration is not a \u201cforeign or international tribunal\u201d under Section 1782.<\/p>\n

The Lithuanian Arbitration was a \u201charder question\u201d.\u00a0 One party was a sovereign nation (Lithuania) and the right to arbitrate in that case stemmed from an international bilateral investment treaty.\u00a0 However, the Court explained that the treaty at issue provided the parties a choice of submitting the dispute to a court, a pre-existing arbitral body or an ad hoc panel.\u00a0 The parties in this matter chose an ad hoc arbitration panel.\u00a0 The treaty did not provide this panel with any governmental authority.\u00a0 \u201c[T]he treaty does not itself create the panel; instead, it simply references the set of rules that govern the panel\u2019s formation and procedure if an investor chooses that forum.\u201d\u00a0 The ad hoc panel acts independently and is not affiliated with any country or governmental entity.\u00a0 Ultimately, the Court concluded that, in this case, the panel\u2019s authority derived from the parties\u2019 consent and not from any government authority.\u00a0 The Court explained that \u201ca body does not possess governmental authority just because nations agree in a treaty to submit to arbitration before it. \u201c<\/p>\n

The Court\u2019s opinion about the DIS Arbitration that private arbitrations are not subject to discovery under Section 1782 is consistent with the opinions of the Second, Fifth and Seventh Circuits and clarifies this aspect of Section 1782.\u00a0 Litigants in private international arbitration will no longer be able to utilize Section 1782 to obtain discovery for those arbitrations.<\/p>\n

However, the decision about the Lithuanian Arbitration had just the opposite impact.\u00a0 Prior to the ZF Automotive Decision, to the extent courts considered the issue, courts generally assumed that an arbitral tribunal constituted under a bilateral investment treaty \u201cunquestionably would be \u2018for a use in a proceeding in a foreign or internal tribunal\u2019\u201d.\u00a0 See In re Chevron Corp.,<\/em> 633 F.3d 153, 161 (3d Cir. 2011); see also Islamic Republic of Pakistan v. Arnold & Porter Kaye Scholer LLP<\/em>, 2019 WL 1559433, at *7 (D.D.C. Apr. 10, 2019) (District courts \u201chave regularly found that arbitrations conducted pursuant to Bilateral Investment Treaties, and specifically by the ICSID, qualify as international tribunals under the statute\u201d).\u00a0 Yet, the Court in the ZF Automotive Decision found despite the fact that the Lithuanian Arbitration was pursuant to a treaty and had a governmental entity as a party, this arbitration still was not a \u201cforeign or international tribunal\u201d.<\/p>\n

The Court left open the possibility that in a different circumstance, \u201csovereigns might imbue an ad hoc arbitration panel with official authority\u201d.\u00a0 The Court though did not describe what circumstances would provide sufficient \u201cofficial authority\u201d.\u00a0 The Court rejected the comparison of the arbitral panel here to the adjudicatory body \u201cin the dispute over the sinking of the Canadian ship I\u2019m Alone, which derived from a treaty between the United States and Great Britain\u201d or to the United States-Germany Mixed Claims Commission.\u00a0 The Court explained that the main \u201cinquiry is whether those features and other evidence establish the intent of the relevant nations to imbue the body in question with governmental authority\u201d.\u00a0 The Court pointed out that, for example, the treaty in the case of the Mixed Claims Commission provided more involvement by the sovereigns in the arbitral process than was the case in the Lithuanian Arbitration. The Lithuanian Arbitration did not have this degree of governmental involvement.<\/p>\n

However, as the Court noted, in other cases, it is possible that there would be sufficient official authority to permit discovery pursuant to Section 1782.\u00a0 It is just not clear in which cases.\u00a0 For example, if the arbitral panel were to be before an ICSID tribunal whose authority and rules and procedures are part of and\/or derived from a multilateral treaty this might be sufficient official authority.\u00a0 We can anticipate that courts will now be faced with cases raising the issue of which arbitrations have sufficient official authority to permit discovery under Section 1782.<\/p>\n

 <\/p>\n

<\/div>\n

Michael Lazaroff<\/a> is a partner in the Rimon Litigation group in the New York office.\u00a0 He is an experienced trial and appellate lawyer with over two decades of experience in complex commercial litigation and arbitration representing both defendants and plaintiffs. \u00a0His extensive experience includes international litigation and arbitration, multidistrict actions, class actions, partnership disputes, antitrust litigation and counseling, copyright litigation, complex contract disputes, and pharmaceutical litigation Read more about Michael.<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

A unanimous Supreme Court on June 13 determined that 28 U.S.C. \u00a71782 (\u201cSection 1782\u201d) does not permit United States courts to order discovery for foreign or international \u201cprivate adjudicatory bodies\u201d.\u00a0 ZF Auto. US, Inc. v. Luxshare, Ltd., No. 21-401, 2022 WL 2111355, *3 (2022)(\u201cZF Automotive Decision\u201d).\u00a0 Rather, the Supreme Court held that Section 1782 only…<\/p>\n","protected":false},"author":325,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"footnotes":""},"categories":[8],"tags":[],"ppma_author":[2279],"acf":[],"yoast_head":"\nSupreme Court Narrows Availability of United States Discovery for International Arbitration - Rimon Law<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.rimonlaw.com\/supreme-court-narrows-availability-of-united-states-discovery-for-international-arbitration\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Supreme Court Narrows Availability of United States Discovery for International Arbitration - Rimon Law\" \/>\n<meta property=\"og:description\" content=\"A unanimous Supreme Court on June 13 determined that 28 U.S.C. \u00a71782 (\u201cSection 1782\u201d) does not permit United States courts to order discovery for foreign or international \u201cprivate adjudicatory bodies\u201d.\u00a0 ZF Auto. US, Inc. v. Luxshare, Ltd., No. 21-401, 2022 WL 2111355, *3 (2022)(\u201cZF Automotive Decision\u201d).\u00a0 Rather, the Supreme Court held that Section 1782 only…\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.rimonlaw.com\/supreme-court-narrows-availability-of-united-states-discovery-for-international-arbitration\/\" \/>\n<meta property=\"og:site_name\" content=\"Rimon Law\" \/>\n<meta property=\"article:published_time\" content=\"2022-06-28T18:01:53+00:00\" \/>\n<meta name=\"author\" content=\"Jennifer DeMattio\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Jennifer DeMattio\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"8 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.rimonlaw.com\/supreme-court-narrows-availability-of-united-states-discovery-for-international-arbitration\/\",\"url\":\"https:\/\/www.rimonlaw.com\/supreme-court-narrows-availability-of-united-states-discovery-for-international-arbitration\/\",\"name\":\"Supreme Court Narrows Availability of United States Discovery for International Arbitration - Rimon Law\",\"isPartOf\":{\"@id\":\"https:\/\/www.rimonlaw.com\/#website\"},\"datePublished\":\"2022-06-28T18:01:53+00:00\",\"dateModified\":\"2022-06-28T18:01:53+00:00\",\"author\":{\"@id\":\"https:\/\/www.rimonlaw.com\/#\/schema\/person\/42739a6ba86e9c67bd9d3c5d79059c8d\"},\"breadcrumb\":{\"@id\":\"https:\/\/www.rimonlaw.com\/supreme-court-narrows-availability-of-united-states-discovery-for-international-arbitration\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/www.rimonlaw.com\/supreme-court-narrows-availability-of-united-states-discovery-for-international-arbitration\/\"]}]},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\/\/www.rimonlaw.com\/supreme-court-narrows-availability-of-united-states-discovery-for-international-arbitration\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\/\/www.rimonlaw.com\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Supreme Court Narrows Availability of United States Discovery for International Arbitration\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/www.rimonlaw.com\/#website\",\"url\":\"https:\/\/www.rimonlaw.com\/\",\"name\":\"Rimon Law\",\"description\":\"Law Firm Evolved\",\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/www.rimonlaw.com\/?s={search_term_string}\"},\"query-input\":\"required name=search_term_string\"}],\"inLanguage\":\"en-US\"},{\"@type\":\"Person\",\"@id\":\"https:\/\/www.rimonlaw.com\/#\/schema\/person\/42739a6ba86e9c67bd9d3c5d79059c8d\",\"name\":\"Jennifer DeMattio\",\"image\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.rimonlaw.com\/#\/schema\/person\/image\/d1d3cd0cdc6f3fa585696ce5ae30c647\",\"url\":\"https:\/\/secure.gravatar.com\/avatar\/09be075f817fc53139a185f666973965?s=96&d=mm&r=g\",\"contentUrl\":\"https:\/\/secure.gravatar.com\/avatar\/09be075f817fc53139a185f666973965?s=96&d=mm&r=g\",\"caption\":\"Jennifer DeMattio\"},\"url\":\"https:\/\/www.rimonlaw.com\/author\/jennifer-demattiorimonlaw-com\/\"}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"Supreme Court Narrows Availability of United States Discovery for International Arbitration - Rimon Law","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/www.rimonlaw.com\/supreme-court-narrows-availability-of-united-states-discovery-for-international-arbitration\/","og_locale":"en_US","og_type":"article","og_title":"Supreme Court Narrows Availability of United States Discovery for International Arbitration - Rimon Law","og_description":"A unanimous Supreme Court on June 13 determined that 28 U.S.C. \u00a71782 (\u201cSection 1782\u201d) does not permit United States courts to order discovery for foreign or international \u201cprivate adjudicatory bodies\u201d.\u00a0 ZF Auto. US, Inc. v. Luxshare, Ltd., No. 21-401, 2022 WL 2111355, *3 (2022)(\u201cZF Automotive Decision\u201d).\u00a0 Rather, the Supreme Court held that Section 1782 only…","og_url":"https:\/\/www.rimonlaw.com\/supreme-court-narrows-availability-of-united-states-discovery-for-international-arbitration\/","og_site_name":"Rimon Law","article_published_time":"2022-06-28T18:01:53+00:00","author":"Jennifer DeMattio","twitter_card":"summary_large_image","twitter_misc":{"Written by":"Jennifer DeMattio","Est. reading time":"8 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"WebPage","@id":"https:\/\/www.rimonlaw.com\/supreme-court-narrows-availability-of-united-states-discovery-for-international-arbitration\/","url":"https:\/\/www.rimonlaw.com\/supreme-court-narrows-availability-of-united-states-discovery-for-international-arbitration\/","name":"Supreme Court Narrows Availability of United States Discovery for International Arbitration - Rimon Law","isPartOf":{"@id":"https:\/\/www.rimonlaw.com\/#website"},"datePublished":"2022-06-28T18:01:53+00:00","dateModified":"2022-06-28T18:01:53+00:00","author":{"@id":"https:\/\/www.rimonlaw.com\/#\/schema\/person\/42739a6ba86e9c67bd9d3c5d79059c8d"},"breadcrumb":{"@id":"https:\/\/www.rimonlaw.com\/supreme-court-narrows-availability-of-united-states-discovery-for-international-arbitration\/#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/www.rimonlaw.com\/supreme-court-narrows-availability-of-united-states-discovery-for-international-arbitration\/"]}]},{"@type":"BreadcrumbList","@id":"https:\/\/www.rimonlaw.com\/supreme-court-narrows-availability-of-united-states-discovery-for-international-arbitration\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/www.rimonlaw.com\/"},{"@type":"ListItem","position":2,"name":"Supreme Court Narrows Availability of United States Discovery for International Arbitration"}]},{"@type":"WebSite","@id":"https:\/\/www.rimonlaw.com\/#website","url":"https:\/\/www.rimonlaw.com\/","name":"Rimon Law","description":"Law Firm Evolved","potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/www.rimonlaw.com\/?s={search_term_string}"},"query-input":"required name=search_term_string"}],"inLanguage":"en-US"},{"@type":"Person","@id":"https:\/\/www.rimonlaw.com\/#\/schema\/person\/42739a6ba86e9c67bd9d3c5d79059c8d","name":"Jennifer DeMattio","image":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/www.rimonlaw.com\/#\/schema\/person\/image\/d1d3cd0cdc6f3fa585696ce5ae30c647","url":"https:\/\/secure.gravatar.com\/avatar\/09be075f817fc53139a185f666973965?s=96&d=mm&r=g","contentUrl":"https:\/\/secure.gravatar.com\/avatar\/09be075f817fc53139a185f666973965?s=96&d=mm&r=g","caption":"Jennifer DeMattio"},"url":"https:\/\/www.rimonlaw.com\/author\/jennifer-demattiorimonlaw-com\/"}]}},"authors":[{"term_id":2279,"user_id":325,"is_guest":0,"slug":"jennifer-demattiorimonlaw-com","display_name":"Jennifer DeMattio","avatar_url":"https:\/\/secure.gravatar.com\/avatar\/09be075f817fc53139a185f666973965?s=96&d=mm&r=g","user_url":"","last_name":"DeMattio","first_name":"Jennifer","description":""}],"_links":{"self":[{"href":"https:\/\/www.rimonlaw.com\/wp-json\/wp\/v2\/posts\/11552"}],"collection":[{"href":"https:\/\/www.rimonlaw.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.rimonlaw.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.rimonlaw.com\/wp-json\/wp\/v2\/users\/325"}],"replies":[{"embeddable":true,"href":"https:\/\/www.rimonlaw.com\/wp-json\/wp\/v2\/comments?post=11552"}],"version-history":[{"count":0,"href":"https:\/\/www.rimonlaw.com\/wp-json\/wp\/v2\/posts\/11552\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.rimonlaw.com\/wp-json\/wp\/v2\/media?parent=11552"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.rimonlaw.com\/wp-json\/wp\/v2\/categories?post=11552"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.rimonlaw.com\/wp-json\/wp\/v2\/tags?post=11552"},{"taxonomy":"author","embeddable":true,"href":"https:\/\/www.rimonlaw.com\/wp-json\/wp\/v2\/ppma_author?post=11552"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}