The United States holding power in legal proceedings all over the world?
Section 1782 of the United States Code allows an interested person in a non-US (foreign) proceeding to request discovery of evidence from a US-based entity for use in that foreign legal proceeding. However, does a “foreign legal proceeding” include 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, historically US Federal Courts have been split as to whether parties to international commercial arbitrations can obtain such evidence this way. It is only in more recent years that the US Court of Appeals for the Sixth Circuit ruled that, Yes, US-style discovery under Section 1782 is also 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, both 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 had 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.
On appeal, 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 Relevant 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 matter of Servotronics, Inc. v. Rolls-Royce PLC, the Judge at first instance agreed with Rolls-Royce and Boeing that section 1782(a) does not authorise a US court to provide discovery assistance in private foreign arbitrations. Servtronics appealed, and the US Court of Appeals for the Seventh Circuit affirmed the Judge’s decision.
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 US court decisions on the question.
With the decisions in the Sixth Circuit and several other US appeal courts in more recent years consistently addressing the issues, it is hoped (and assumed) that there will be a growing consensus on the interpretation of Section 1782.
Please contact Meghan Warren or Rosy Dean or call our office on +61 3 9822 8588 for assistance in Australian, US or international commercial litigation or alternative dispute resolution.
