U.S. Supreme Court Rules 1782 Discovery Not Available for Private Arbitration

Over the past twenty (20) years, there has been a split in the U.S. District and Circuit Courts as to whether 28 U.S.C. §1782, which permits district courts to order testimony or the production of evidence “for use in a proceeding in a foreign or international tribunal”, applies to private adjudicatory bodies such as foreign private arbitrations.   Our prior summaries of the legal tug of war which has taken place over the past thirty (30) months, can be accessed here.  Previously, the Sixth Circuit and Fourth Circuit Courts of Appeals had ruled that the answer was yes; while the Second, Fifth, and Seventh Circuits had all ruled that the statute did not cover private arbitrations.  District courts around the country came down on both sides.  Two (2) recent cases were consolidated so that the U.S. Supreme Court could resolve this disputed question.

Writing for a unanimous court, in ZF Automotive US, Inc., et al. v. Luxshare, Ltd., (consolidated with Alixpartners, LLP, et al. v. The Fund for Protection of Investors Rights in Foreign States), 596 U.S. __ (2022), Justice Barrett delivered the opinion of the U.S. Supreme Court this morning, Monday June 13, 2022.  In a short opinion, the Court held that the statute reaches “only governmental or intergovernmental adjudicative bodies, and neither of the arbitral panels involved in these cases fits that bill.” Although the lower courts had analyzed lots of different aspects of the statute and legislative history, the U.S. Supreme Court held that the “key phrase for purposes of this case is “foreign or international tribunal.’”  Id., p. 1. Justice Barrett points out that if, the word “tribunal” stood alone, that would be good reason to include private arbitral bodies as those types of bodies for which discovery could be ordered as the word is generally understood to be quite broad.  Id., at p. 6.   However, tribunal does not stand alone and when read in context with “foreign or international,” the U.S. Supreme Court held that tribunal, with those modifiers, “is best understood as an adjudicative body that exercises governmental authority.”  Id., at 7.  Comparing the definitions and meanings of the words, the Court summed up the phrase as follows: “So understood, “foreign tribunal” and “international tribunal” complement one another; the former is a tribunal imbued with governmental authority by one nation, and the latter is a tribunal imbued with governmental authority by multiple nations.” Id., at p. 9.

Although the U.S. Supreme Court resolved the question by simply reviewing and interpreting the statutory language, the remainder of the opinion explained that the Court’s holding and 1782’s focus on governmental and intergovernmental tribunals is further confirmed by both the statute’s history and the comparison to the Federal Arbitration Act (“FAA”), 9. U.S.C. §1, et seq.  The Court explained that the primary purpose of 1782 was comity with other nations; so why would Congress lend the resources of the district courts to aid purely private bodies adjudicating purely private disputes abroad, which by way of example could “include everything from a commercial arbitration panel to a university’s student disciplinary tribunal.” Id., at p. 10.  Finally, to allow broader discovery than the FAA allows domestically in the United State would place the statute in great tension and a “notable mismatch” between discovery available in foreign arbitrations compared to limited discovery available from district courts in domestic arbitrations. Id., at p. 11.

In assessing whether either of the bodies in the cases before it were “governmental or intergovernmental” the U.S. Supreme Court explained they were not.  The first case was a private arbitration and the opinion rejected the idea that simply because a private arbitration was subject to the laws which govern and enforce them, that does not turn the panel into a “governmental adjudicative body.” Id., at 12.  The ad hoc arbitration panel was a harder question for the Court to answer, though ultimately the ruling was that the ad hoc panel although involving foreign nations, it was not the intent of Russia and Lithuania for the panel to exercise governmental authority, rather it simply was the result of an agreed mechanism for the formation of an arbitration panel to resolve a private dispute, all of which occurred because of the parties voluntary consent to arbitration; not because “Russia and Lithuania clothed the panel with governmental authority.” Id., at p. 15. In closing, the opinion left open that future sovereigns may imbue an ad hoc arbitration panel with official authority.  Under such a limited case, 1782 would be available.

A copy of the U.S. Supreme Court’s Opinion may be read here.

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