Section 1782 Discovery in International Arbitration: Factors to Consider in Light of U.S. Case Law

Article excerpt

This article explores the case law addressing whether Section 1782 discovery is available to private or governmental international arbitral tribunals, or both. It discusses the lessons from the case law and the issues involved in planning to make a Section 1782 application.

Broad and expansive discovery distinguishes litigation in the United States from litigation in almost every other nation. This comparatively unchecked pre-trial procedure has often driven parties to resolve their cross-border commercial disputes in international arbitration, where discovery and prehearing procedures can be streamlined. This raises the question of whether the discovery allowed by Section 1782 of Title 28 of the United States Code applies to international arbitral tribunals, particularly those created under private arbitration agreements. There are many articles discussing the case law on this issue and this article covers some of the same ground. But what makes this article different is that it discusses some practical considerations concerning Section 1782 that parties should take into account when: (1) negotiating a dispute resolution clause (for example, whether to limit Section 1782 discovery in the arbitration agreement or prescribe particular procedures, and where to seat the arbitration), (2) preparing to arbitrate (such as what to look for in selecting the arbitrators), and (3) contemplating making a Section 1782 request in court (for instance, where to file the request-i.e., the district court in which to file and the timing of the request).

Requirements of Section 1782

Under Section 1782, litigants in certain foreign courts may apply to a U.S. district court to obtain discovery from a person or entity located in the U.S. for use in those foreign proceedings. The requesting party must show that the applicant is an "interested party" in a proceeding in a "foreign or international tribunal." There is also a procedural requirement. The request must be made to the district court in the district in which the person from whom discovery is sought resides or "is found."1

When Section 1782 was revised in 1964, international arbitration was not a common dispute resolution mechanism. U.S. courts readily granted Section 1782 applications for discovery in aid of proceedings in foreign courts. It was not until the early 1990s that courts faced the issue of whether the phrase a "foreign or international tribunal" applied to an international arbitral tribunal. The decisions from district courts were not uniform. The issue reached both the 2nd and 5th Circuits, each concluding that Section 1782 did not apply to international arbitral tribunals. Then Intel Corp. v. Advanced Micro Devices reached the U.S. Supreme Court.2 The Intel decision clarified a number of questions about Section 1782, but it did not decide whether the statute encompassed either governmental or private arbitral tribunals, or both. As a result, district courts continued to disagree.

Case Law Prior to 2004

Section 1782's application to arbitral tribunals was first addressed in 1994.3 Technostroyexport, a Russian association, obtained an order under Sec tion 1782 allowing it to serve subpoenas on In ternational Development and Trade Services, a New York corporation, for use in private arbitrations in Moscow and Stockholm against IDTS. IDTS filed a motion to quash the subpoenas, arguing that Section 1782 did not apply to arbitral tribunals. The district court did not agree and announced, "The court is of the view that an arbitrator or arbitration panel is a 'tribunal' un - der Section 1782." But it cited no authority for this opinion. Despite finding Section 1782 applicable to arbitral panels, the court vacated the or - der allowing the subpoenas because Techno - stroyexport had made no effort to first obtain the subpoenas through the tribunals in the foreign arbitrations. The court considered it improper to allow Technostroyexport to sidestep the arbitral panels' authority on the third-party discovery com pletely, commenting that "[i]t appears to be generally accepted that the rules and procedures in arbitration are intended to be radically different from the rules and procedures in the courts. …