United States power in proceedings all over the world? Section 1782 of the United States Code allows an interested person in a non-US proceeding to request discovery of evidence from a US-based entity for use in a foreign legal proceeding. However, this rule does not expressly state whether “foreign proceeding” includes not only court proceedings but also international commercial arbitrations.
Even though the US Supreme Court has given broad interpretation to Section 1782 and ruled that foreign litigants can obtain discovery in the US subject to certain guidelines, US Federal Courts remain split as to whether parties to international commercial arbitrations can obtain such evidence this way. It is only recently that the US Court of Appeals for the Sixth Circuit ruled that, yes, US-style discovery under Section 1782 is available to parties in foreign commercial arbitrations.
Sixth Circuit Court of Appeals
In the case of Abdul Latif Jameel Transportation Company (ALJTC) v. FedEx Corporation, the parties, within the same month, commenced arbitration - ALJTC commenced arbitration proceedings in Saudi Arabia while FedEx commenced arbitration in Dubai.
Since FedEx was incorporated in Delaware, ALJTC filed a discovery application in aid of the two foreign arbitrations. In March 2019, however, the US District Court denied the application, ruling that the arbitrations were not initiated in a “foreign or international tribunal” within the scope of Section 1782.
FedEx argued that for a non-US arbitration to qualify as a “foreign or international tribunal”, it must be sponsored by the state or at least derive its authority from the government.
The Sixth Circuit Court of Appeals ultimately ruled that Section 1782 discovery does apply to non-judicial proceedings, expanding the scope to include international commercial arbitration.
Other US Court of Appeal Decisions
In 1999, the Second Circuit Court of Appeals decided in National Broadcasting Co., Inc. v. Bear Stearns & Co., that Section 1782 did not apply to international commercial arbitrations seated outside of the US. However, on 30 January 2019, the Court declined to follow that 1999 decision, holding that an arbitration governed by the London Court of International Arbitration rules fell within the scope of Section 1782.
In the context of an international arbitration over a 2016 aircraft fire in South Carolina, the US Courts of Appeals for the Fourth and Seventh Circuits are currently considering whether parties involved in international arbitrations outside of the US can leverage Section 1782 to seek discovery from entities within the United States.
In Servotronics, Inc. v. Rolls-Royce PLC, the Seventh Circuit Court of Appeals will soon decide whether Section 1782 allows parties to international arbitrations to seek US discovery. The US District Court for the Northern District of Illinois initially granted Servotronics’ Section 1782 application, which sought information relating to the aircraft’s sale and delivery, data and recordings from the day of the fire, and information about any post-incident investigation that Boeing had conducted. The Seventh Circuit Court of Appeals has now been asked to decide whether to allow Servotronics to serve its subpoena on Boeing in the context of the parties’ pending private commercial arbitration.
Key Takeaways
For some time now, there has been uncertainty as to whether Section 1782 may be used to obtain discovery in aid of non-US commercial arbitrations which has resulted in conflicting court decisions on the question.
With the recent decision in the Sixth Circuit and several other US appeal courts soon to address the issue, it is hoped (and assumed) that there will be a growing consensus on the interpretation of Section 1782.
Please contact Meghan Warren Principal or Rosy Dean (nee Rosy Roberts), Associate at Burke Lawyers on mwarren@burkelawyers.com.au and rroberts@burkelawyers.com.au or +61 3 9822 8588 for assistance in Australian, US or international commercial transactions, litigation or alternative dispute resolution.
