Disclosure in international arbitration

Introduction

Unbeknownst to many, a US statute (28 U.S.C. § 1782) exists that permits parties to obtain discovery in the US in aid of non-US legal proceedings including – in some instances – international arbitrations. Such discovery can include documents and sworn testimony (depositions). In conducting an arbitration seated outside the US (or other non-US legal proceedings), it is useful to understand the mechanics, requirements and key issues of § 1782 discovery.

Statutory text

Section 1782, in its present form, reads as follows in pertinent part:

(a) The district court of the district in which a person resides or is found may order him to give his testimony or statement or to produce a document or other thing for use in a proceeding in a foreign or international tribunal, including criminal investigations conducted before formal accusation. The order may be made pursuant to a letter rogatory issued, or request made, by a foreign or international tribunal or upon the application of any interested person and may direct that the testimony or statement be given, or the document or other thing be produced, before a person appointed by the court.

“Since its inception, Congress has steadily increased the scope of the discovery available under [§ 1782] such that it has been given ‘increasingly broad applicability.’” In re Gianoli Aldunate, 3 F.3d 54, 57 (2d Cir. 1993).

Mechanics

To request § 1782 discovery, a party files an ex parte petition in the US judicial district in which the target of the discovery “resides or is found.” The petition describes the requested discovery, the applicable non-US legal proceedings and why the discovery should be permitted. The court can rule on the petition ex parte or accept submissions from other parties and/or the target. If the petition is granted, the requested discovery is issued and proceeds under the standard rules prescribed by the Federal Rules of Civil Procedure. If the petition is denied, an appeal may be raised.

Requirements and discretionary factors

For a district court to grant § 1782 discovery, three requirements must be met: (1) the application must be made by an “interested party” or a foreign or international tribunal; (2) the person from whom discovery is sought must “reside” or be “found” in the jurisdiction of the district court where the § 1782 petition is filed; and (3) the document or testimony must be for “use” in a foreign or international tribunal.

In addition to these requirements, the US Supreme Court has identified four discretionary factors that a district court should consider when ruling on a § 1782 petition: (1) whether the person from whom discovery is sought is a participant in the foreign proceeding; (2) the nature of the foreign tribunal, the character of the proceedings, and the receptivity of the foreign government or the court or agency abroad to US federal court judicial assistance; (3) whether the § 1782 request conceals an attempt to circumvent foreign proof-gathering restrictions or other policies of a foreign country or the United States; and (4) whether the discovery would be unduly intrusive or burdensome. Intel Corp. v Advanced Micro Devices, Inc. (Intel), 542 US 241, 264-65 (2004).

Key issues

Can § 1782 be used in aid of international arbitration proceedings?

Prior to Intel, two US courts of appeal had held that Congress had not intended international arbitrations to fall within the scope of “foreign tribunals” under § 1782. Post-Intel, the trend in US courts has shifted, as courts have relied on the dicta in Intel that “foreign tribunals” include “quasi-judicial” bodies and those that act as first-instance decision makers whose decisions are subject to judicial review, to include international arbitral tribunals.

The authority, however, is still not unified. In the First, Third, Eighth and DC Circuits, district courts have held that at least some types of private arbitral tribunals fall within the scope § 1782, while district courts in the Fifth, Seventh, Ninth and Tenth Circuits have held the opposite. The Second Circuit has not weighed in, but at least one Second Circuit district court, recognizing tension between circuit precedent and Intel on this issue, looked outside the jurisdiction for guidance and ultimately held that a series of private commercial arbitrations occurring before the London Maritime Arbitration Association qualified as proceedings before a “foreign tribunal” within the meaning of § 1782. See In Re Ex Parte Application of Kleimar N.V., No. 16-MC-355, 2016 WL 6906712 (S.D.N.Y. Nov. 16, 2016).

Must the non-US proceedings be pending?

No. In Intel, the Supreme Court rejected the argument that § 1782 discovery is limited to pending or imminent adjudicative foreign proceedings, holding that § 1782 requires only that a dispositive ruling by a foreign judicial or quasi-judicial body, reviewable by the courts, be within “reasonable contemplation.” Intel, 542 US at 259.

Is the term “interested person” limited to actual litigants?

No. In Intel, the Supreme Court held that § 1782’s “any interested person” requirement includes not only litigants before foreign or international tribunals, but also any other person who possesses a “reasonable interest” in obtaining judicial assistance.

The facts of Intel are instructive. The petitioner there had filed an antitrust complaint with the Directorate General for the Competition of the European Commission and in that proceeding held certain participation rights, including the right to submit information to the commission and the right to proceed to court if the commission discontinued the investigation or dismissed the complaint. The Supreme Court found these participation rights sufficient to give the petitioner the required “reasonable interest” in obtaining judicial assistance to qualify it as an “interested person.”

What is the meaning of “resides or is found”?

Section 1782, as the statute makes clear, can only be requested in a judicial district where a person “resides or is found.” The Supreme Court has not yet interpreted this term. One appellate court has ruled that for depositions, mere physical presence in the district, even if temporary, is enough to satisfy this requirement. See Edelman v Taittinger, 295 F.3d 171, 178, 180 (2d Cir. 2002). For requests for production of documents, no circuit authority yet exists, however, the weight of authority suggests that a person must meet the standard US requirements of general or specific personal jurisdiction in order to satisfy the “resides or is found” requirement.

Must the requested discovery be located within the US?

Only one circuit court has weighed in on whether § 1782 can be used to obtain documents located outside the United States. In 2016, the Eleventh Circuit held that – particularly with regards to electronically stored information – the physical location of documents does not establish a per se bar to § 1782 discovery. See Sergeeva v Tripleton International Ltd, et al., 834 F.3d 1194 (11th Cir. 2016). The court ordered production of documents held electronically in the Bahamas by an affiliate of a U.S.-based company based on evidence that the companies regularly shared documents and information, and the documents were therefore in the “possession, custody and control” of the U.S.-based company even though they were located in the Bahamas.

The few district courts that have considered the issue, both before and after Sergeeva, are split. A New York district court summarized the Second Circuit authority: “the bulk of authority in this Circuit suggests that a § 1782 respondent cannot be compelled to produce documents located abroad.” In re Kreke Immobilien KG, No. 13 MISC. 110 NRB, 2013 WL 5966916, at *4 (S.D.N.Y. Nov. 8, 2013) (citing In re Godfrey, 526 F. Supp. 2d 417, 423–24 (S.D.N.Y. 2007)). A California district court refused to consider the issue, but cited a Ninth Circuit case as “acknowledging support for the view that § 1782 was not intended to support discovery of material located outside the United States.” In re Ex Parte Application of Qualcomm Inc., 162 F. Supp. 3d 1029, 1036 (N.D. Cal. 2016) (citing Four Pillars Enterprises Co., Ltd. v Avery Dennison Corp., 308 F.3d 1075 (9th Cir. 2002)). In 2005, the Washington, DC district court found that the existing case law suggested that “§ 1782 is not properly used to seek documents held outside the United States as a general matter.” Norex Petroleum Ltd. v Chubb Ins. Co. of Canada, 384 F. Supp. 2d 45, 52 (D.D.C. 2005). However, later cases have granted § 1782 petitions where documents may be held outside the United States so long as the documents are in the possession, custody or control of a person that falls within the jurisdiction of the court. See, e.g., In re Barnwell Enterprises Ltd, 265 F. Supp. 3d 1, 16 (D.D.C. 2017).

Must the requested discovery be discoverable under the rules of the non-US jurisdiction?

No. In Intel, the Supreme Court held that there is no threshold requirement under § 1782 that the evidence being sought must be discoverable under the law governing the non-US proceeding or that the discovery would otherwise be discoverable in US domestic litigation analogous to the non-US proceeding.